RC Hedreen Co. v. Crow Tribal Housing Authority, CV-80-136-BLG.
| Decision Date | 28 May 1981 |
| Docket Number | No. CV-80-136-BLG.,CV-80-136-BLG. |
| Citation | 521 F. Supp. 599 |
| Court | U.S. District Court — District of Montana |
| Parties | R. C. HEDREEN COMPANY, a Washington corporation, Plaintiff, v. CROW TRIBAL HOUSING AUTHORITY, Defendant. |
COPYRIGHT MATERIAL OMITTED
Stephen M. Rummage, Rex M. Walker, Davis, Wright, Todd, Rises & Jones, Seattle,
Wash., and Gary B. Chumrau, Garlington, Lohn & Robinson, Missoula, Mont., for plaintiff.
Urban Bear Don't Walk, Billings, Mont., David K. Schoyer, Denver, Colo., for defendant.
This is an action to recover money allegedly due the plaintiff for construction of housing on the Crow Indian Reservation, and for damages allegedly arising from wrongful non-payment of those amounts. It is before the Court on a motion to dismiss.
The Crow Tribal Housing Authority was established in 1963 pursuant to an ordinance of the Crow Tribe. The ordinance was enacted in accordance with guidelines established by the Department of Housing and Urban Development (HUD) so as to qualify for HUD assistance in building housing for Indians living on the Crow Indian Reservation.
On September 29, 1976, after competitive bidding, the Housing Authority entered into a construction contract with G. R. Associates.1 The contract provided for the construction of single family homes and a community building. The project was sponsored and financed by HUD under the Mutual Help Homeownership Opportunity Program. Under the terms of the program, HUD provided the financing for the projects by delivering funds to the Housing Authority, and the Authority would, in turn, make payments to the contractor as per the construction contracts.
Link & Associates was the architect on the project. It was responsible for supervising the daily progress of the construction. On or about November 9, 1979, Link certified that the project was completed and that the final payments on the contracts were due and owing. HUD has paid the Housing Authority the amounts to be paid the contractor, but no payment has been made to the contractor.
G. R. Construction assigned all of its rights under the contracts to R. C. Hedreen on August 5, 1980. R. C. Hedreen then brought this action to collect amounts allegedly due on the contracts and to recover interest expense incurred in borrowing funds to finance projects subsequent to the one at issue here. According to the plaintiff, these loans were necessary to replace moneys which would have been available had the defendant made timely payment. Jurisdiction is assertedly grounded on diversity of citizenship, 28 U.S.C. § 1332.
The defendant Housing Authority prosecutes this motion to dismiss on several bases:
IV. DISCUSSION
Defendant first contends that this Court lacks jurisdiction based on diversity of citizenship (28 U.S.C. § 1332) since the complaint fails to contain "a short and plain statement of the ground upon which the Court's jurisdiction depends." Fed.R.Civ.P. 8(a). Defendant insists that plaintiff's assertion that the Housing Authority is an "entity" does not adequately state what kind of citizen the Authority is for purposes of diversity jurisdiction under 28 U.S.C. § 1332(a)(1).
28 U.S.C. § 1332(a) states:
The district court shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interests and costs, and is between (1) citizens of different states; ....
The plaintiff alleges in Paragraph 3 of its complaint that it is a citizen of the State of Washington, with its principal place of business in Washington, that more than $10,000 is in controversy, and that "the Crow Tribal Housing Authority is an entity having citizenship in the State of Montana." Rule 8(a) requires nothing more than this: such allegations constitute "a short and plain statement of the ground upon which the court's jurisdiction depends." Fed.R.Civ. Pro. 8(a).
Defendant next contends that the Housing Authority is not a citizen of the state of Montana, but, rather, a public body created by the Crow Tribe, a sovereign nation. It cites substantial authority for the uncontested principle that the Crow Tribe is not a citizen of Montana or a foreign state for diversity purposes. The question is posited, "If the Crow Tribe is not a citizen for diversity purposes, how can a public body created pursuant to a tribal ordinance be a citizen of Montana?"
No theoretical problem is presented. The tribe is immune from suit as a result of its sovereign status, thus the tribe as an entity is not a citizen for diversity purposes. The Housing Authority was established as a corporate entity pursuant to Tribal Ordinance 64-17 so that the tribe could deal effectively as a business entity in the commercial community. That it has done; it hardly lies in its mouth to deny its existence as a commercial corporation with its principal place of business within the state of Montana.
Plaintiff cites several cases for the proposition that an Indian corporation is a citizen for purposes of diversity jurisdiction. See Parker Drilling Co. v. Metlakatala Indian Community, 451 F.Supp. 1127 (D.Alaska 1978); Namekagon Development Co., Inc. v. Bois Forte Reservation Housing Authority, 395 F.Supp. 23 (D.Minn.1974); Enterprise Electric Co. v. Blackfeet Tribe of Indians, 353 F.Supp. 991 (D.Mont.1973); R. C. Hedreen Co. v. Blackfeet Indian Reservation and the Blackfeet Housing Authority, CV-80-37-GF (Sept. 30, 1980). Only the Namekagon and R. C. Hedreen cases involved suits against corporations chartered pursuant to tribal ordinance; in the other cases, the only corporations involved were tribal entities chartered pursuant to the Indian Reorganization Act, 25 U.S.C. § 477. These two cases provide little guidance to the Court on this issue: In Namekagon the court did not address the issue of diversity of citizenship, apparently assuming the Housing Authority was a citizen for purposes of diversity; in R. C. Hedreen the court summarily concluded that diversity was present since it was alleged that the Housing Authority "is an entity with its citizenship and principal place of business in Montana."
The reason prior court decisions have not expressly addressed the question of whether a corporation chartered by the tribe is a citizen for diversity purposes is that the issue is almost inseparable from the issue of sovereign immunity. To illustrate, under the defendant's analysis it would be possible to conclude that the Housing Authority and/or even the Crow Tribe has completely waived its sovereign immunity, yet nonetheless cannot be sued in federal court since they are not "citizens" for purposes of diversity jurisdiction. Both common sense and the legal practicalities of the commercial world dictate a contrary result. Regardless of the sovereign source from which a corporate entity derives its charter, when it is constituted with all of the required formalities it comes into existence as a legal entity. As a legal entity, it is susceptible to suit on its contracts in any court of competent jurisdiction unless it enjoys some legal excuse, e. g., sovereign immunity. While the court recognizes that an Indian tribe is not a citizen of the state of Montana, it is not a tribe that is being sued. Rather, it is a business entity created to do that which the tribe could not do without waiving its immunity to suit, i. e., "enter into agreements, contracts and understandings with ... any person, partnership, corporation ...." Tribal Ordinance 64-17 at 5. The Housing Authority has its principal and only place of business in the state of Montana. Accordingly, it is a citizen of the state for purposes of diversity jurisdiction and is susceptible to suit in federal court if it has waived its immunity to suit in those courts.
The defendant next contends that any waiver of sovereign immunity is limited to suits in tribal court. There is at least one court that has apparently reached precisely this result. In Hickey v. Crow Creek Housing Authority, 379 F.Supp. 1002 (D.S.D. 1974), the court was faced with a situation highly analogous to that presented here: The tribe had passed an ordinance authorizing the Housing Authority to agree by contract to waive any immunity from suit it might otherwise have, and the plaintiff subsequently entered a contract with the Authority. Though diversity of citizenship was not urged as a basis of jurisdiction, the court, in passing on the other asserted bases of jurisdiction, concluded that:
By granting its consent to sue and be sued, the Tribal Council would only have power to establish tribal, not federal, jurisdiction in actions concerning the Housing Authority.
Though the Hickey court doesn't elaborate upon or cite any authority in support of its statement, the court's conclusion appears to be a logical extension of the explicit dicta in several cases that a tribe cannot consent to a waiver of immunity without a specific act of Congress. See United States...
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