U.S. ex rel. Saint v. President

Citation451 F.3d 44
Decision Date01 June 2006
Docket NumberNo. 05-3823-CV.,05-3823-CV.
PartiesUNITED STATES of America, ex rel. the SAINT REGIS MOHAWK TRIBE, Plaintiff-Counter-Defendant-Appellant v. PRESIDENT R.C.-ST. REGIS MANAGEMENT COMPANY and Anderson-Blake Construction Corporation, Defendants-Counterclaimants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Daniel A. Seff, Barr & Associates, P.C., Stowe, VT, for Plaintiff-Counter-Defendant-Appellant.

Loretta M. Gastwirth, Meltzer, Lippe, Goldstein & Breitstone, L.L.P., Mineola, NY, for Defendant-Counterclaimant-Appellee President-R.C. St. Regis Management Company.

Marlene L. Budd, Law Offices of Marlene L. Budd, Esq., Dix Hills, NY, for Defendant-Counterclaimant-Appellee Anderson-Blake Construction Corp.

Before: CABRANES and B.D. PARKER, Circuit Judges PRESKA, District Judge*.

LORETTA A. PRESKA, District Judge:

We consider here whether a district court may exercise original jurisdiction over a declaratory judgment action brought pursuant to the former 25 U.S.C. § 811 to void a contract for lack of approval alleged to be required under the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. § 2701 et seq. Answering that question in the negative, we hold that the district court was without jurisdiction to entertain the action and we affirm the dismissal.

BACKGROUND

On November 7, 1997, Appellant St. Regis Mohawk Tribe ("Tribe") entered into a five-year casino management agreement ("Management Agreement") with Appellee President R.C.-St. Regis Management Company ("President R.C."). As required by IGRA, the Management Agreement was submitted to the National Indian Gaming Commission ("NIGC" or "Commission") for approval. The NIGC approved the Management Agreement on December 26, 1997. Under the Management Agreement, President R.C. was authorized, inter alia, to enter into contracts for the construction of the Akwesasne Mohawk Casino ("Casino"). On January 11, 1998, President R.C. executed a construction contract ("Construction Contract") with Appellee Anderson-Blake Construction Company ("Anderson-Blake") to build the Casino for some $14 million dollars. The Construction Contract was not submitted for NIGC approval.

The Casino was completed, and its doors opened on April 11, 1999. Business was not as brisk as expected in the first year of operation, and the Tribe expelled President R.C., bringing in new management several years prior to the expiration of the five-year Management Agreement. President R.C. brought suit for breach of contract in state court, but the action was stayed by stipulation of the parties after the Tribe brought this action to declare the Construction Contract null and void on either of two grounds: first, that the Construction Contract was not approved by the NIGC and, second, that an individual named Gary Melius had surreptitiously maintained a financial interest in the Management Agreement and the Construction Contract notwithstanding the NIGC's indication that it would refuse to approve the Management Agreement if Melius had a financial interest in it. The Management Agreement at § 10.8(A) states that actions between the parties shall be brought in federal district court or, if the federal court determines that it lacks subject matter jurisdiction, in state court. Under the Agreement, at § 11.6, the governing law is as follows: "the laws of the United States of America, and where such laws are non-existent or inapplicable, the laws of the State of New York."

On a motion to dismiss, the district court (McAvoy, J.) held that the Construction Contract was collateral to the Management Agreement and therefore subject to approval by the Commission under IGRA. United States ex rel. St. Regis Mohawk Tribe v. President R.C.-St. Regis Mgmt. Co., No. 02 Civ. 845, slip op. at 15 (N.D.N.Y. May 22, 2003)("2003 Decision"). The district court also held that the Tribe's complaint was sufficient to state a claim that the Construction Contract was void because of the lack of NIGC approval and the alleged improper financial interest retained by Gary Melius. Id. at 19-20. Moreover, the district court permitted the use of the qui tam provision of 25 U.S.C. § 81 as a mechanism for bringing the Tribe's declaratory judgment action. See generally id. The district court reasoned that although 25 U.S.C. § 81 had been amended so as not to apply to the circumstances presented here by the time the action was filed, the former version of the statute was still in effect at the time the contract was formed, and its amendment was not retroactive. Id. at 7-9.

On a motion for summary judgment, the district court (Hurd, J.) held that the Construction Contract was not a collateral agreement providing for management of all or part of the gaming operation and thus did not require approval by the Commission. See United States ex rel. St. Regis Mohawk Tribe v. President R.C.-St. Regis Mgmt. Co., No. 02 Civ. 845, 2005 U.S. Dist. LEXIS 12456, at *9-10 (N.D.N.Y. June 13, 2005) ("2005 Decision") (citing 25 C.F.R. § 502.15, which defines a "management contract" requiring NIGC approval to include "any ... collateral agreement ... [that] provides for the management of all or part of a gaming operation"): Leaving aside the issue of the retroactive effect of § 81's amendment, the district court held that § 81, which governs contracts with Indians, was inapplicable because "[t]here is no question that the Construction Contract was executed by President [R.C.] and Anderson-Blake, neither of which is an Indian Tribe or [an] individual Indian[]." Id. at *11. The counterclaims against the Tribe were dismissed on grounds of sovereign immunity. Id. at *12.

The 2005 Decision noted that "[i]n October 2002 the Tribe sent a letter to the Commission requesting that proceedings be initiated to void or modify the Management Agreement" but that "[t]he action, if any, taken by the Commission in response to the letter is unknown." Id. at *6-7. On January 9, 2004, the Acting General Counsel to the Commission, William Grant, executed an affidavit with an annexed letter opining that the Construction Contract did not require Commission approval. Mr. Grant's letter explained that the Construction Contract deals only with construction and is not related to management of gaming activity.

DISCUSSION

This appeal presents the question of whether a casino construction contract purported to be collateral to a gaming management agreement may be the subject of an action in the district court outside the parameters of IGRA. It also presents the question of whether the Tribe may bring a declaratory judgment action under 25 U.S.C. § 81 to void a casino construction contract to which the Tribe was not a party. At the outset, we examine the statutes.

I. The Statutes: 25 U.S.C. § 81 and IGRA

Congress enacted the precursors to 25 U.S.C. § 81 in the early 1870s. See Act of March 3, 1871, ch. 120, § 3, 16 Stat. 570; Act of May 21, 1872, ch. 177, §§ 1-2, 17 Stat. 136. The statute took its modern form in 1958 and was amended in 2000. When the former § 81 was in effect, contracts between Indians and non-Indians required approval by the Secretary of the Interior ("Secretary") under the terms of the statute. Any contract with an Indian or Indian tribe that was not approved by the Secretary as required by § 81 was "null and void" by the statute's express language. Section 81 authorized a qui tam action in the name of the United States to recover amounts paid by Indians in excess of what was authorized by the Secretary. In this "bounty hunter" action, see United States ex rel. Mosay v. Buffalo Bros. Mgmt., Inc., 20 F.3d 739, 742 (7th Cir. 1994), the statute prescribed that half of any amount recovered go to the relator and the other half to the United States Treasury "for the use of the Indian or tribe by or for whom it was so paid." 25 U.S.C. § 81.

In 1988, Congress enacted IGRA, 25 U.S.C. § 2701 et seq., a more detailed statutory framework regulating Indian gaming management agreements and contracts collateral to such agreements. IGRA specifically provides that the authority formerly vested in the Secretary of the Interior under 25 U.S.C. § 81, e.g., approving contracts between Indians and non-Indians, is transferred to the NIGC with respect to contracts regulated by IGRA. See 25 U.S.C. § 2711(h). Under 25 U.S.C. § 2709 (Interim authority to regulate gaming), the Secretary retained authority over Indian gaming until the Commission was organized and its regulations promulgated. Since 1993, when the IGRA regulations were promulgated, Indian gaming management contracts have been subject to approval by the Chairman of the Commission. See 25 U.S.C. § 2711 (Management contracts). A "management contract" is defined in the NIGC regulations as "any contract, subcontract, or collateral agreement between an Indian tribe and a contractor or between a contractor and subcontractor if such contract or agreement provides for the management of all or part of a gaming operation." 25 C.F.R. § 502.15 (Management contract). A collateral agreement is defined as a contract "that is related, either directly or indirectly, to a management contract, or to any rights, duties or obligations created between a tribe ... and a management contractor or subcontractor ...." 25 C.F.R. § 502.5 (Collateral agreement).

Under § 2711 of Title 25, gaming management agreements and certain collateral agreements must be submitted to the Chairman of the Commission for approval.2 25 U.S.C. § 2711(a)-(b). If the Chairman fails to act on a management contract or collateral agreement submitted for approval within 180 days (or 270 days where the time period is extended), an Indian tribe may bring an action in district court to compel a decision. 25 U.S.C. § 2711(a)(3),(d). "The Chairman, after notice and a hearing, . . . may void any contract if he subsequently determines that any of the [various procedural or substantive requirements governing management...

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