Stock West Corp. v. Taylor
| Decision Date | 18 May 1992 |
| Docket Number | No. 90-35201,90-35201 |
| Citation | 964 F.2d 912 |
| Parties | STOCK WEST CORPORATION, an Oregon corporation, Plaintiff-Appellant, v. Michael TAYLOR, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Barbee B. Lyon, Tonken, Torp, Galen, Marmaduke & Booth, Portland, Or., for plaintiff-appellant.
Alan C. Stay, Colville Confederated Tribes, Nespelem, Wash., for defendant-appellee.
Appeal from the United States District Court for the District of Oregon.
Before: WALLACE, Chief Judge, and PREGERSON, ALARCON, D.W. NELSON, HALL, THOMPSON, O'SCANNLAIN, LEAVY, TROTT, FERNANDEZ, and T.G. NELSON, Circuit Judges.
Stock West Corporation ("Stock West") appeals from the dismissal of this action by the district court for lack of jurisdiction and because the claims are barred by tribal sovereign immunity. We affirm the dismissal of this action because we conclude that the district court did not abuse its discretion in abstaining from the exercise of its jurisdiction in this matter pending the presentation of Stock West's claim to the Colville Tribal Court. We vacate that portion of the judgment holding that Michael Taylor was protected by sovereign immunity for his conduct as Reservation Attorney for the Confederated Tribes of the Colville Reservation ("Colville Tribes").
Before analyzing the legal questions presented in this appeal, we must set forth the genesis of this prolonged and multifaceted dispute in some detail. In 1983, James F. Stock was invited to the reservation by the Colville Tribes to discuss the construction of a sawmill on tribal lands. Mr. Stock agreed that he would prepare a design and a marketing plan for a tribal sawmill. A document entitled "Professional Services Agreement" was signed by Mr. Stock and a representative of the Colville Tribes on January 20, 1984. After receiving and reviewing Mr. Stock's proposal, the Colville Tribes decided to proceed with the project.
Stock West was incorporated in the State of Oregon on February 27, 1984, for the purpose of constructing and managing the Colville Tribes sawmill. Mr. Stock was selected as the chairman of the board and chief executive officer of Stock West. Stock West proposed the drafting of a contract for the construction of the sawmill and a second agreement for the management and marketing of its products. The parties agreed that the Colville Tribes would create two governmental corporations to enter into the contracts with Stock West. The Tribal Governmental Corporations Act, Title 25 of the Colville Tribal Code, was adopted to carry out this proposal.
The Colville Tribes created the Colville Tribal Enterprise Corporation ("CTEC") to conduct business activities for the economic advancement of tribal members, and to build the sawmill. The Colville Indian Precision Pine Company ("CIPP"), was organized for the purpose of operating the sawmill. Stock West was given the power to approve three members of CIPP's five member board of directors. Mr. Stock was made a director and the President of CIPP.
Stock West retained Johnson, Marceau, Karnopp, and Petersen, a Bend, Oregon law firm, to represent it in the negotiations with the Colville Tribes. James Noteboom, of the Johnson firm, wrote to Mr. Taylor on April 24, 1984, requesting that he "make sure that we obtain Bureau approvals where needed" pursuant to the provisions of 25 U.S.C. § 81. 1
On July 23, 1984, Mr. Stock, on behalf of Stock West, and a tribal representative, acting for CTEC and CIPP, executed the Construction Management Agreement ("CMA") and the Management Marketing Agreement ("MMA"). These contracts were signed on the reservation.
Under the CMA, Stock West agreed to manage and supervise all phases of the construction of the sawmill. Stock West maintained an office on the reservation for this purpose. It was agreed that the actual construction was to be performed by tribal members or contractors. Construction of the sawmill was substantially completed by February 1986.
Mr. Taylor was the senior attorney in the office of the Reservation Attorney for the Confederated Tribes of the Colville Reservation. As such, Mr. Taylor was the chief legal officer for the Colville Tribes. Mr. Taylor was appointed to serve as counsel for CTEC and CIPP by the Colville Tribes through its Colville Business Council.
On July 27, 1984, Mr. Noteboom transmitted copies of the CMA, and the Articles of Incorporation of the CTEC and the CIPP to Arthur Biggs, the Assistant Regional Solicitor for the Department of Interior to give him "a little headstart in your review." On August 2, 1984, Mr. Taylor sent copies of the MMA and the CMA to George Davies, the Superintendent of the Colville Indian Agency, for his review.
On September 28, 1984, Mr. Biggs informed Wilfred Bowker, Assistant Area Director, Program Services of the Bureau of Indian Affairs ("BIA") that:
in our opinion, 25 U.S.C. § 81 does not require the Bureau to approve these agreements as they are not made with a "tribe of Indians or individual Indians" covered by that statute but are made with a corporate entity having its own legal status separate and apart from that of the tribe which chartered it.
On October 10, 1984, Mr. Taylor sent a memorandum to the BIA Forest Manager in which Mr. Taylor stated: "I believe that the Bureau would be justified in reviewing the contracts for approval because when any entity is dealing with CTEC or CIPP, that entity is dealing with the Tribes." A copy of this memorandum was sent to Mr. Stock, and to James Pierce, who had been appointed by Stock West as a board member and general manager of CIPP.
On December 7, 1984, Mr. Bowker transmitted a memorandum to the Superintendent of the Colville Agency in which he expresses the following conclusions:
Bureau approval of the two agreements between Stock West Corporation, CTEC, and CIPP is not required by 25 USC Section 81. Further, I believe that such approval is not desirable since it would cause unnecessary Bureau intrusion into the business activities of the tribal corporations.
Stock West did not file an appeal from the BIA's determination that Section 81 did not require its approval of the contracts.
In July 1985, Stock West informed the Colville Tribes that it could obtain financing for the construction of the sawmill from the United Savings Bank, Mutual of Salem, Oregon ("United Savings Bank"). At United Savings Bank's request, Mr. Taylor prepared an opinion as legal counsel for the tribal corporations, regarding the authority of CTEC and CIPP to enter into a loan agreement with the approval of the Secretary of the Interior. Mr. Taylor's opinion was researched, drafted, and signed on the Colville Reservation. In his letter to the United Savings Bank, Mr. Taylor opined that:
[n]o consent, approval or authorization of or registration, declaration or filing with any governmental or public body or authority is required to construct the Project or operate the Mill, or if required, such consent, approval, order or authorization has been obtained.
Listed among the documents relied upon by Mr. Taylor in forming his opinion was the December 7, 1984 decision of the Assistant Area Director of the Portland, Oregon office of the BIA Branch of Forestry.
On July 10, 1985, Mr. Taylor traveled to Portland, Oregon to deliver his written opinion and to close the loan. Mr. Stock signed the loan agreement on behalf of the borrowers, as President of CIPP. Mr. Pierce also signed as the General Manager and Corporate Secretary of CTEC. Stock West was not a party to the loan agreement. Pursuant to the loan agreement, United Savings Bank loaned 6.6 million dollars to CTEC and CIPP to finance the construction of the sawmill.
The following year, the Colville Tribes concluded that Stock West had failed to perform its contractual duties. On July 15, 1986, CTEC and the Colville Business Council served a notice of default on Stock West. Stock West demanded that the matter be submitted to arbitration. The Colville Tribes refused to agree to arbitration, or to make any further payments to Stock West. CTEC and CIPP advised Stock West that the contracts had been terminated.
On July 30, 1986, the Colville Tribes, the Colville Business Council, CTEC, and CIPP filed an action in the Colville Tribal Court for declaratory and injunctive relief, as well as for recoupment of monies paid to Stock West. On August 17, 1987, the Colville Tribal Court ruled that it had subject matter jurisdiction over the dispute. Confederate Tribes of the Colville Reservation v. Stock West, Inc., 14 Indian L.Rptr. 6025 (Colville Tribal Ct. Aug. 17, 1987). The Colville Tribal Court also ruled that the agreements were void for lack of BIA approval under Section 81. Confederated Tribes of the Colville Reservation v. Stock West Inc., 15 Indian L.Rptr. 6019 .
On April 7, 1987, Stock West filed an action to compel arbitration against the Colville Tribes in the United States District Court for the Eastern District of Washington. The district court dismissed the action out of deference to the Colville Tribal Court's concurrent jurisdiction under the principle of comity. We affirmed in Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221 (9th Cir.1989). We concluded that it was proper for the district court to abstain from exercising its concurrent jurisdiction as a matter of comity. Id. at 1229-30.
Stock West attempted to obtain the BIA's retroactive approval of its agreements with the Colville Tribes on two occasions. The first attempt was denied by the BIA on July 21, 1987. Stock West did not file an administrative appeal. After the Colville Tribal Court ruled that the contracts were void, Stock West appealed to the Interior Board of Indian Appeals. The appeal was dismissed as untimely. Stock West, Inc. v. Portland Area Director, Bureau of...
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