Rosebud Sioux Tribe v. A & P Steel, Inc.
| Decision Date | 04 June 1984 |
| Docket Number | 82-2187 and 82-2217,Nos. 83-1748,s. 83-1748 |
| Parties | , 15 Fed. R. Evid. Serv. 1270 ROSEBUD SIOUX TRIBE, Appellant, v. A & P STEEL, INC., Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Charles Rick Johnson, Johnson, Eklund & Davis, Gregory, S.D., J.M. Grossenburg, Day, Grossenburg & Whiting, Winner, S.D., for appellant.
Franklin J. Wallahan of Wallahan Law Offices, Rapid City, S.D., David A. Gerdes of May, Adam, Gerdes & Thompson, Pierre, S.D., for appellee A & P Steel, Inc.
Before HEANEY, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and BRIGHT, Circuit Judge.
The plaintiff, 1 the Rosebud Sioux Tribe (Tribe), sued the defendant, A & P Steel, Inc. (A & P), in United States District Court for the District of South Dakota. 2 The suit sought damages for fraud, conspiracy, breach of contract and breach of warranties arising out of a contract for the development of an irrigation system on land owned by the Tribe. 3 The jury returned a verdict for A & P. A judgment dismissing the Tribe's complaint, and awarding over seventy-four thousand dollars to A & P on its counterclaim, was entered on August 27, 1982. The Tribe filed a timely notice of appeal with this court, and A & P cross-appealed.
On December 29, 1982, the Tribe filed a motion for relief from judgment pursuant to Fed.R.Civ.P. 60(b). The trial court denied the motion on May 16, 1983, and the Tribe appealed this denial. The Tribe's appeal from the underlying action, A & P's cross-appeal, and the Tribe's appeal from denial of the 60(b) motion were consolidated. This court heard oral argument on January 9, 1984. We reverse the denial of the 60(b) motion, and we remand for a new trial consistent with this opinion.
In 1977, the chairperson of the Tribe, Edward Driving Hawk, contacted the attorney for Tribal Land Enterprises (TLE), Michael Strain. Richard Lone Dog was the chairperson of TLE. TLE is a subsidiary of the Tribe, but it is a separate corporation with different stockholders, and it is responsible for the administration of all land owned by the Tribe. Driving Hawk sought Strain's assistance in obtaining funds for irrigation development under the Emergency Drought Assistance Act of 1977, Pub.L. No. 95-18, 91 Stat. 36 (1977). Attorney Strain was, in fact, instrumental in securing a grant which ultimately exceeded two million dollars.
After preliminary negotiations with various companies, the Tribe, through Driving Hawk, and A & P, through its vice-president, Don McPherson, began contract negotiations. On June 21, 1977, Charles Colombe, a member of the Tribal Council, drafted and presented a resolution which authorized Driving Hawk to negotiate and enter into a contract for the construction of an irrigation system. The Tribal Council unanimously adopted the resolution. Attorney Strain drew up the contract which was signed by both parties on June 21, 1977. Driving Hawk issued a "notice to proceed" on the same day, and A & P began construction on the project.
Attorney Strain formed a dummy corporation, Frontrunner Associates, Inc., on July 13, 1977. This corporation received payments from A & P, and made payments to Driving Hawk and Lone Dog as set out in the following chart.
After these checks were returned by the bank to Attorney Strain, he entered the subject of each "purchase" on the memo portion of each check. Strain claimed that the payments to Driving Hawk and Lone Dog were for legitimate purchases.
The payments from A & P to Attorney Strain reflect the fact that he had been hired by A & P, shortly after the Tribe and A & P had made their agreement, as a "consultant" on the irrigation project. Thus, Strain was working for the Tribe and A & P simultaneously. Initially, A & P was to pay Attorney Strain $2,000 per month plus 4.5% of the contract amount. When the contract was expanded, Strain was to be paid $2,000 per month plus 6% of the contract amount. The president of A & P, Thomas Pearce, admitted at trial that, in an earlier and unrelated legal proceeding, he had testified that he was aware Strain was the attorney for TLE at the time A & P put Strain on retainer.
On June 29, 1978, Colombe appeared before the Tribal Council and made allegations to the effect that fraud, corruption and nepotism surrounded the irrigation project. As a result, the Council passed resolutions that provided for the formation of an investigatory committee, and also provided that "sign-offs" on the irrigation systems and finalization of the contract would be suspended until the committee completed its investigation. Driving Hawk presided at this meeting. The Tribe alleges that Strain obtained a copy of the minutes from the meeting and sent a copy to A & P.
Before the June 29 Council meeting, Driving Hawk had delegated to Eddie Farmer the task of checking and "signing off" each of the irrigation systems. Farmer began the sign-offs on June 6 and, despite the resolutions adopted by the Council, continued to make sign-offs until July 5 1978. A separate sign-off for each system was signed by Farmer. After all the sign-offs were complete, Driving Hawk tried to pay A & P the balance of the contract price, but the check bounced because of insufficient funds.
The parties had entered into a "turn-key" contract. That is, while the Tribe retained the right to determine the location of each irrigation system, A & P was responsible for the design, engineering, surveying, labor, supervision, equipment, tools, and materials incidental to the construction of each system. The contract document incorporated, by reference, a statement of contract conditions, a schedule for payments, and a "proposal".
There were several conditions to the contract, a few of which are relevant here. A & P was to guard the Tribe's property from injury or loss. Pursuant to this provision, A & P agreed to acquire insurance for this purpose and explicitly assumed responsibility for security. All work, material and records related to the project were to be subject to inspection by authorized Tribal representatives.
Further, the Tribe was to be the final judge of the quality and suitability of each phase of the project. Anything which did not meet the Tribe's approval was to be rebuilt, replaced, or fixed by A & P at A & P's expense. If this option was undesirable, the Tribe retained the right to reduce A & P's compensation in an amount the Tribe felt was equitable.
As each irrigation system was finished, it was to be inspected by the Tribe. If the work was acceptable, the Tribe was to pay A & P for the system less 10% as retainage. Upon this payment, a system became the Tribe's property, but payment was not to relieve A & P from responsibility for the obligations it had assumed under the contract. Nor was payment to be construed as a waiver of the Tribe's right to require fulfillment of the contract terms. If, after half of the work was done, the Tribe determined that A & P's performance was satisfactory, the Tribe was to pay in full for the work subsequently completed. However, the Tribe would continue to hold onto the fees retained during the first half of the project until thirty days after a certificate of completion had been issued.
Finally, the statement of conditions included a general guarantee.
Neither the final certificate of payment nor any provision in the contract documents nor partial or entire occupancy of the premises by [the Tribe] shall constitute an acceptance of work not done in accordance with the contract documents or relieve [A & P] of liability in respect to any express warranties for faulty materials or [work]. [A & P] shall remedy any defects in the work and pay for any damage to other work resulting therefrom, which shall appear within a period of one year from the date of final acceptance of work unless a longer period is specified. [The Tribe] will give notice of observed defects with reasonable promptness.
The "proposal" contained a list of parts and their cost. It also contained a limited, one year warranty which included a general disclaimer of all other warranties. 4 The contract was signed on June 21, 1977. The proposal was mailed to the Tribe on June 30, 1977.
Before trial, the Tribe took the deposition of Richard Lone Dog who held the chair of TLE. At the time the deposition was taken, Lone Dog was represented by Attorney Strain. Lone Dog's deposition testimony flatly contradicted the allegations contained in the Tribe's complaint.
The Tribe subpoenaed Lone Dog as a witness for trial. Lone Dog had been advised by his attorney to invoke the Fifth Amendment's protection against self-incrimination and refuse to testify. A & P objected to the Tribe calling Lone Dog to the stand solely...
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