Kiowa Indian Tribe of Oklahoma v. Hoover

• Decision Date: 13 July 1998
• Docket Number: 96-6401,Nos. 96-6278,s. 96-6278
• Citation: 150 F.3d 1163
• Parties: 98 CJ C.A.R. 3813 KIOWA INDIAN TRIBE OF OKLAHOMA, a federally recognized Indian Tribe, Plaintiff-Appellant, v. Robert M. HOOVER, Jr., an individual; Aircraft Equipment Company, a joint venture formed under the laws of Oklahoma; John M. Amick, in his capacity as a District Judge, State of Oklahoma; James B. Blevins, in his capacity as a District Judge, State of Oklahoma; Carolyn R. Ricks, in her capacity as a District Judge, State of Oklahoma, Defendants-Appellees,
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1163

150 F.3d 1163

98 CJ C.A.R. 3813

KIOWA INDIAN TRIBE OF OKLAHOMA, a federally recognized Indian Tribe, Plaintiff-Appellant, v. Robert M. HOOVER, Jr., an individual; Aircraft Equipment Company, a joint venture formed under the laws of Oklahoma John M. Amick, in his capacity as a District Judge, State of Oklahoma; James B. Blevins, in his capacity as a District Judge, State of Oklahoma; Carolyn R. Ricks, in her capacity as a District Judge, State of Oklahoma, Defendants-Appellees,

Nos. 96-6278, 96-6401.

United States Court of Appeals Tenth Circuit.

July 13, 1998.

R. Brown Wallace (Shelia D. Tims with him on the briefs) of Andrews Davis Legg Bixler Milsten & Price, Oklahoma City, Oklahoma, for Plaintiff-Appellant.

Neal Leader, Senior Assistant Attorney General, Oklahoma City, Oklahoma, for Defendants-Appellees John M. Amick, James B. Blevins and Carolyn R. Ricks.

William J. Robinson of Shirk, Work & Robinson, P.C., Oklahoma City, Oklahoma, for Defendants-Appellees Robert M. Hoover, Jr., and Aircraft Equipment Company.

Before BRORBY and McWILLIAMS, Circuit Judges, and BLACK, ^* District Judge.

BRORBY, Circuit Judge.

This is a consolidated appeal of the dismissal of a 42 U.S.C. § 1983 suit brought by the Kiowa Tribe of Oklahoma (Kiowa or the Tribe) and the earlier denial of the Tribe's request for a preliminary injunction related to that action. The § 1983 action alleged multiple violations of the Tribe's rights, privileges and immunities, including the right and privilege to have its commerce regulated pursuant to federal law, the right and privilege to immunity from damage suits, and the right and privilege to exercise its powers of sovereignty and self-government. Concluding consideration of the § 1983 action was barred by the Rooker-Feldman doctrine, which generally prohibits lower federal courts from hearing federal claims requiring direct review of final state court judgments, the district court dismissed the Tribe's suit, in effect a dismissal for lack of subject matter jurisdiction. We review dismissals for lack of subject matter jurisdiction de novo. Quintana v. United States, 997 F.2d 711, 712 (10th Cir.1993). Accordingly, this court independently reviews the district court's conclusions on legal issues and need not defer to the district court's decisions on the law. Key v. Liquid Energy Corp., 906 F.2d 500, 505 (10th Cir.1990).

In conjunction with its § 1983 action, the Tribe sought a preliminary injunction barring further prosecution of state contract claims against the Tribe and use of certain post-judgment remedies directed against the Tribe, including seizure of a variety of tribal assets, on the basis that these procedures violated the Tribe's sovereign immunity and, hence, exceeded state jurisdiction. After a hearing, the district court denied the Tribe's motion. This court reviews a district court order denying a preliminary injunction for abuse of discretion. Chemical Weapons Working Group, Inc. v. United States Dep't of the Army, 111 F.3d 1485, 1489 (10th Cir.1997). An abuse of discretion occurs when the district court bases its ruling on an erroneous conclusion of law or relies on clearly erroneous fact findings. Id. We must carefully scrutinize the district court's exercise of its discretion, but "we may not ... substitute our own judgment for that of the trial court." Tri-State Generation & Transmission Ass'n, Inc. v. Shosone River Power, Inc., 805 F.2d 351, 354-55 (10th Cir.1986). The merits of the underlying action may be considered on appeal "only insofar as they bear on the issue of judicial discretion." Otero Savings & Loan Ass'n v. Federal Reserve Bank, 665 F.2d 275, 276-77 (10th Cir.1981).

These consolidated appeals raise an unsettled question of subject matter jurisdiction. We exercise jurisdiction under 28 U.S.C. § 1291 and 28 U.S.C. § 1292 and reverse the district court's dismissal of the Tribe's § 1983 suit, reverse the district court's denial of a preliminary injunction, and remand for further proceedings.

I State Proceedings

The Kiowa Tribe of Oklahoma is a federally recognized Indian tribe. ¹ 61 Fed.Reg. 58,211, 58,213 (1996). This consolidated appeal stems from a series of related suits ² against the Kiowa Tribe and certain named tribal representatives arising from promissory notes the Tribe gave to purchase all stock in ClintonSherman Aviation, Inc. ³ Neither Congress nor the Tribe consented to these suits or otherwise waived the Tribe's sovereign immunity. To the contrary, the Tribe specifically reserved its sovereign rights in the notes upon which it was sued. See, e.g., Hoover, 909 P.2d 59, 61 (Okla. 1995) (noting state district court's finding of express reservation of sovereign immunity in promissory note and security agreement). ⁴

Creditor Robert M. Hoover, Jr., a non-Indian, sued the Tribe and six named individuals in state court alleging the Tribe breached a contract by failing to make any of the agreed payments on a promissory note for $142,500. ⁵ Hoover, 909 P.2d at 60. Asserting sovereign immunity, the Tribe moved to dismiss for lack of jurisdiction. Id. at 60-61. The trial court agreed and dismissed Mr. Hoover's complaint. Id. at 61. Mr. Hoover appealed. Id. A divided Oklahoma Supreme Court held "a contract between an Indian tribe and a non-Indian is enforceable in state court when the contract is executed outside of Indian Country." Id. at 62 (5-3 decision). On remand, Oklahoma District Court Judge James B. Blevins entered a money judgment against the Tribe.

Meanwhile, Aircraft Equipment Company (Aircraft Equipment) sued Kiowa for breach of an assumption agreement in which the Tribe agreed to assume the indebtedness of Aircraft Equipment on a note, and failed to make the required payments on the outstanding debt of $180,000. ⁶ Aircraft Equip. Co. v. Kiowa Tribe, 921 P.2d 359, 360 (Okla.1996) (Aircraft Equip. I ). The Tribe filed a motion to dismiss, again asserting tribal sovereign immunity, which was denied by the state district court. Id. Aircraft Equipment's motion for summary judgment was granted, and Oklahoma District Court Judge Carolyn R. Ricks entered a money judgment against the Tribe. Id. On appeal, the Oklahoma Court of Appeals affirmed the district court. Id. Subsequently, a majority of the Oklahoma Supreme Court, in reliance on its decision in Hoover, again held the Tribe was subject to a money damage suit for claims arising from commercial activity outside Indian Country, openly departing from this Court's opinion to the contrary in Sac & Fox Nation v. Hanson, 47 F.3d 1061, 1065 (10th Cir.) (holding extra-territorial nature of commercial activity does not strip tribe of its right to assert sovereign immunity), cert. denied, 516 U.S. 810, 116 S.Ct. 57, 133 L.Ed.2d 21 (1995). Id. at 360-61. See also First Nat'l Bank v. Kiowa, Comanche & Apache Intertribal Land Use Comm., 913 P.2d 299, 301-02 (Okla.1996) (Kauger, J., dissenting) (arguing Hoover "directly contradicts" the Tenth Circuit ruling in Sac & Fox Nation and, therefore, should be overruled). The judgment of the trial court was affirmed. Aircraft Equip., 921 P.2d at 360.

While the decision of the state district court in Aircraft Equip. I was on appeal, Aircraft Equipment initiated post-judgment proceedings in the state district court to satisfy the money judgment entered against the Tribe. ⁷ See Aircraft Equip. Co. v. Kiowa Tribe, 939 P.2d 1143 (Okla.1997) (Aircraft Equip. II), vacated, --- U.S. ----, 118 S.Ct. 2058, 141 L.Ed.2d 136 (1998). Aircraft Equipment first sought to satisfy its judgment against the Tribe by garnishing oil and gas tax revenues held for the Tribe by Watson Management Group, Inc. (Watson Management), the Tribe's contracted tax collector, and similar funds deposited in the Anadarko Bank & Trust Company. Id. at 1145 n. 1. Rejecting the Tribe's claim that neither a sovereign nor its tax revenues may be garnished, Oklahoma District Court Judge Ricks entered judgment in favor of Aircraft Equipment. That judgment is currently on appeal.

Aircraft Equipment also sought equitable relief in the nature of a creditor's bill. Aircraft Equip. II, 939 P.2d at 1145. Through the creditor's bill, Aircraft Equipment sought to satisfy its money judgment from oil and gas severance taxes accruing to the Tribe but possessed by Watson Management and various taxpayers, oil and gas entities. Id. The Tribe again attempted to defend against the action by asserting its sovereign immunity. Id. at 1145-46. In the interim, the oil and gas entities asked to interplead the tax funds into the district court and "to restrain the Tribe from enforcing tax liens against them." Id. at 1145. Oklahoma District Court Judge John M. Amick granted Aircraft Equipment's request to satisfy its money judgment from severance taxes accruing to the Tribe, ordered that such funds be paid to the court, and enjoined the Tribe from enforcing liens against the oil and gas entities. ⁸ Id. at 1145. A divided Oklahoma State Supreme Court affirmed the judgment of the state district court, holding that if a state court has the power to render a judgment, then it has the power to enforce a money judgment against the Kiowa Tribe. Id. at 1143, 1148-49 (five justices concurring, two concurring in result only, two dissenting).

Federal Proceedings

While the appeal in Aircraft Equip. II was pending before the Oklahoma Supreme Court, the Tribe concluded pursuit of further relief in state court was "vain, useless and inadequate" in light of the Hoover and Aircraft Equip. I decisions and commenced a § 1983 action in the United States District Court for the Western District of Oklahoma against Mr. Hoover, Aircraft Equipment, and Oklahoma District Court Judges Amick, Blevins, and Ricks (collectively, the Judges) in their official capacities. The Tribe claimed Mr. Hoover and Aircraft Equipment, by bringing breach of contract actions against the Kiowa Tribe in Oklahoma state court, and the Judges, by exercising...