Prairie v. Cason
| Decision Date | 01 July 2016 |
| Docket Number | 3:02-CV-03030-RAL |
| Parties | SUN PRAIRIE, A PARTNERSHIP; AND BELL FARMS LLP, A NEBRASKA LIMITED LIABILITY PARTNERSHIP, Plaintiffs, and COTTONWOOD KNOLL, LLC, Intervenor Plaintiff, v. JAMES CASON, ACTING ASSISTANT SECRETARY - INDIAN AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR, IN HIS OFFICIAL CAPACITY; GALE NORTON, SECRETARY OF THE DEPARTMENT OF THE INTERIOR, IN HER OFFICIAL CAPACITY; AND ROSEBUD SIOUX TRIBE, A FEDERALLY RECOGNIZED TRIBE, Defendants. and CONCERNED ROSEBUD AREA CITIZENS, HUMANE FARMING ASSOCIATION, SOUTH DAKOTA PEACE AND JUSTICE CENTER, AND GEORGE ENGLAND, Intervenor Defendants. |
| Court | U.S. District Court — District of South Dakota |
This Court has held a number of hearings in this case and issued several opinions and orders. Back in April of 2015, after a hearing, this Court issued an Opinion and Order on Pending Motions (Opinion and Order), Doc. 206; Sun Prairie v. Cason, No. 3:02-CV-03030-RAL, 2015 WL 1548954 (D.S.D. Apr. 7, 2015), that interpreted provisions of the Land Lease and Judgment by Consent and Order (Judgment by Consent) governing relationships in this case. Because the language of the key provision of the Land Lease obliged the parties "to renegotiate and adjust the terms" under the circumstances presented, this Court ordered the parties to "cooperate to calculate the amount that Cottonwood Knoll owes to the Rosebud Sioux Tribe." Doc. 206 at 16, 18; Sun Prairie, 2015 WL 1548954, at *8-9. The parties were unable to "renegotiate and adjust the terms" as required under the Land Lease, despite efforts to do so. Accordingly, Cottonwood Knoll LLC (Cottonwood Knoll) filed a Motion for Court to Determine Offset, Doc. 207, and this Court conducted another hearing in this case on April 25, 2016. At that hearing, both of the interested parties in the present dispute—Cottonwood Knoll and the Rosebud Sioux Tribe (the Tribe)—agreed that, because of their failure to "renegotiate and adjust the terms," this Court should apply equitable principles to calculate the amounts owed under the Land Lease and Judgment by Consent between those parties. Repeating some of the facts and reasoning from this Court's Opinion and Order helps to explain why and how this Court calculates what Cottonwood Knoll owes to the Tribe.
Plaintiff Sun Prairie, a general partnership (Sun Prairie) and the Tribe engaged in discussions about business opportunities to promote economic development on the Rosebud Sioux Indian Reservation in early 1998. Sun Prairie and the Tribe signed a letter of intent inApril of 1998 and negotiated a Land Lease contemplating that Sun Prairie would secure financing to build multi-site hog confinement facilities on trust land in Mellette County, that Bell Farms, LLP (Bell Farms) would operate and manage the sites, and that the Tribe would provide water and other support. Sun Prairie secured financing for the project from U.S. Bancorp Ag Credit, Inc. (U.S. Bancorp). In September of 1998, the Tribe and Sun Prairie entered into a Land Lease, Doc. 177-4, which in turn was approved by the Aberdeen office of the Bureau of Indian Affairs. Sun Prairie then began construction of hog confinement facilities at the "Grassy Knoll" site and later at the "Cottonwood Farm" site.
The project met almost immediate public opposition, resulting in three separate lawsuits in two United States district courts—Concerned Rosebud Area Citizens v. Babbitt, No. 98-2841 (); Rosebud Sioux Tribe v. Gover, No. 99-3003-CBK (); and this action, Sun Prairie v. Rosebud Sioux Tribe, No. 02-3030-RAL (D.S.D. filed August 15, 2002). Sun Prairie and Bell Farms filed this action after the Tribe, which had elected a new tribal president, became unsupportive of Sun Prairie's business ventures on the reservation. In April of 2005, the parties in this case settled many of their disputes by negotiating and agreeing to the terms of a Judgment by Consent, which was signed by the Honorable Richard H. Battey on May 19, 2005. Doc. 164. That Judgment by Consent modified but did not nullify the Land Lease. Doc. 164 at 8, ¶ 5.a.(vii).
Sun Prairie, through its operator Bell Farms, operated hog confinement operations at the two sites—Grassy Knoll and Cottonwood Farm—until 2012. Bell Farms reportedly ceased operations in May of 2012, because the operations became economically nonviable, and thereapparently have been no hogs at either site since. Sun Prairie then could not pay its debts to its lender or the Tribe and now is defunct.
On June 13, 2012, the Tribe filed in this case a Motion for an Order to Show Cause, Doc. 167, seeking to enforce certain provisions of the Judgment by Consent. Cottonwood Knoll intervened on July 24, 2012, as a party asserting an interest relating to the property. Doc. 180. Cottonwood Knoll had become the successor to the original mortgagor U.S. Bancorp and was foreclosing on Sun Prairie at that time.
This Court scheduled and conducted an evidentiary hearing on July 30, 2012, in which the Tribe, intervenor Cottonwood Knoll, and the United States government participated. Doc. 186. This Court entered an Order for Enforcement of Judgment by Consent on July 31, 2012, applying Paragraph 111 of the Judgment by Consent to bind successors and assigns of the Plaintiffs to that Judgment, ordering Plaintiffs and any successors and assigns to comply with the provisions of Paragraph 72 of the Judgment by Consent, and allowing any party to file a motion to enlarge the deadline for compliance with Paragraph 7 or otherwise seek relief from this Court. Doc. 187. Through an Amended Order for Enforcement of Judgment by Consent, this Court enlarged Cottonwood Knoll's deadline for compliance with Paragraph 7 of the Judgment by Consent or to otherwise seek relief to December 31, 2013. Doc. 189 at 2.
On November 3, 2014, Cottonwood Knoll filed a Motion for Relief from Consent Judgment. Doc. 192. Cottonwood Knoll, after Sun Prairie and Bell Farms had ceased operations at Grassy Knoll and Cottonwood Farms, had initiated a foreclosure action in state court inMellette County and had obtained a default judgment and decree of foreclosure against Sun Prairie in August of 2012, in the amount of $15,370,337.73. Doc. 193 at 9. The Mellette County Circuit Court determined the fair and reasonable value of foreclosed property—the leasehold interest, structures, and equipment at Grassy Knoll and Cottonwood Farms—at that time to be $2,275,000.00. Doc. 193 at 9; Doc. 194-2. Cottonwood Knoll was the winning bidder at a foreclosure sale on December 19, 2013, with a certificate of sale recorded in late December of 2013. Doc. 194-3. The one-year statutory redemption period on Sun Prairie's interest under South Dakota Codified Laws (SDCL) § 21-52-11 expired in December of 2014. As a result, Cottonwood Knoll now holds the leasehold interest in the Grassy Knoll and Cottonwood Farms. Sun Prairie reportedly is defunct.
Cottonwood Knoll in its 2014 motion sought to be relieved from the requirements of Paragraphs 4 and 7 of the Judgment by Consent in light of the "complete cessation of farming operations," by Sun Prairie and Bell Farms. Doc. 193 at 12. Cottonwood Knoll argued that the Land Lease had expired, that there were no environmental issues with the site, and that Rule 60 of the Federal Rules of Civil Procedure justified either relieving Cottonwood Knoll of responsibility or deeming the Judgment by Consent to have been satisfied and released. Doc. 193. The Tribe countered that Plaintiffs and Cottonwood Knoll have abandoned the premises, thereby triggering a reclamation obligation under Exhibit I to the Land Lease to remove all improvements from Grassy Knoll and Cottonwood Farm and to remediate and return the sites to their original conditions. Alternatively, the Tribe argued that the Judgment by Consent runs the Land Lease to May 19, 2020, and that the Tribe is owed past-due rent, water payments, and interest. For reasons explained in the Opinion and Order on Pending Motions, this Court determined that the lease term had not expired and that Cottonwood Knoll had not abandoned thesites to trigger reclamation responsibilities. Doc. 206 at 10-15; Sun Prairie, 2015 WL 1548954, at *6-7. "Rather, under the language of the Judgment by Consent and the underlying Land Lease, the lease remains in effect at this time and through May 19, 2020." Doc. 206 at 15; Sun Prairie, 2015 WL 1548954, at *7.
Cottonwood Knoll in its 2014 motion also raised an issue regarding property tax payments. This issue arose from the fact that, notwithstanding the sites being on tribal lands, Mellette County invoked SDCL § 10-4-2.1 to assess taxes on the buildings and improvements at Grassy Knoll and Cottonwood Farms, asserting that Sun Prairie owed $634,175.02 for delinquent property tax payments from 2006 through 2011. Doc. 194-4. Sun Prairie, in conjunction with Cottonwood Knoll's vice president, ultimately negotiated down that delinquency to $267,000.00, and signed a settlement agreement with Mellette County to pay that amount. Doc. 193 at 10; Doc. 194-5. The vice president of Cottonwood Knoll, in February of 2013, paid $225,000 of that amount with Sun Prairie's tenant paying the remainder. Doc. 230. Mellette County continues to assess annual property taxes on the two sites. After intervening in this case, Cottonwood Knoll invoked Section 49 of the Land Lease to seek renegotiation and adjustment of what is owed to the Tribe in order to receive credit for the payments to Mellette County. The Tribe countered that Section 49 of the Land Lease did not apply and that Paragraph 9 of the Judgment by Consent relieved the Tribe of any obligation under Section 49 of the Land Lease.
This Court conducted a hearing on February 2, 2015, but neither side...
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