United States v. President R.C.-St. Regis Management Company, No. 05-3823-cv (2nd Cir. 6/1/2006), 05-3823-cv.

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)

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UNITED 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.
No. 05-3823-cv.
United States Court of Appeals, Second Circuit.
Argued: January 31, 2006.
Decided: June 1, 2006.
Errata Filed: June 27, 2006.

Appeal from summary judgment in favor of defendants in this declaratory judgment action brought pursuant to 25 U.S.C. § 81 ("Contracts with Indian Tribes or Indians"). Appellant contends that the district court erred when it dismissed the action to declare a construction contract void on the ground, inter alia, of lack of approval by the National Indian Gaming Commission ("NIGC"). We hold that the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. § 2701 et seq., superseded the former § 81 with respect to approval of Indian gaming and related contracts, leaving Appellants without a § 81 remedy. Moreover, the district court lacked jurisdiction because the action was not brought as an appeal of an agency decision pursuant to IGRA § 2714.

Dismissal affirmed on other grounds.

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*

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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

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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

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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

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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

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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.

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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.

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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...

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