Water Wheel Camp Recreational Area Inc. v. Larance

• Citation: 642 F.3d 802
• Decision Date: 10 June 2011
• Docket Number: Nos. 09–17349,09–17357.,s. 09–17349
• Parties: WATER WHEEL CAMP RECREATIONAL AREA, INC. and Robert Johnson, Plaintiffs–Appellees,v.Gary LARANCE, The Honorable Judge in his capacity as the Chief and Presiding Judge of the Colorado River Indian Tribes Tribal Court, Jolene Marshall, Defendants–Appellants.Water Wheel Camp Recreational Area, Inc. and Robert Johnson, Plaintiffs–Appellants,v.Gary LaRance, The Honorable Judge in his capacity as the Chief and Presiding Judge of the Colorado River Indian Tribes Tribal Court, Jolene Marshall, Defendants–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

642 F.3d 802

11 Cal. Daily Op. Serv. 7123

2011 Daily Journal D.A.R. 8546

WATER WHEEL CAMP RECREATIONAL AREA, INC. and Robert Johnson, Plaintiffs–Appellees,

v.Gary LARANCE, The Honorable Judge in his capacity as the Chief and Presiding Judge of the Colorado River Indian Tribes Tribal Court, Jolene Marshall, Defendants–Appellants.Water Wheel Camp Recreational Area, Inc. and Robert Johnson, Plaintiffs–Appellants,

v.Gary LaRance, The Honorable Judge in his capacity as the Chief and Presiding Judge of the Colorado River Indian Tribes Tribal Court, Jolene Marshall, Defendants–Appellees.

Nos. 09–17349

09–17357.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 17, 2011.Filed June 10, 2011.

Tim Vollmann and Gwenellen P. Janov (argued), Albuquerque, NM, for defendants-appellants The Honorable Gary LaRance and Jolene Marshall.Dennis J. Whittlesey (argued), Dickinson Wright PLLC, Washington D.C., for plaintiff-cross-appellant Water Wheel Camp Recreational Area, Inc., and plaintiff-appellee Robert Johnson.Ellison Folk and Winter King, Shute, Mihaly & Weinberger LLP, San Francisco, CA; Eric Shepard, Office of the Attorney General, Parker, AZ, for amicus curiae Colorado River Indian Tribes.Carl Bryant Rogers, VanAmberg, Rogers, Yepa, Abeita & Gomez, LLP, Santa Fe, NM; Melody L. McCoy, Native American Rights Fund, Boulder, CO, for amicus curiae The National American Indian Court Judges Association.John L. Smeltzer (argued), Environment & Natural Resources Division, United States Department of Justice, Washington D.C., for amicus curiae United States.Rob Roy Smith, Ater Wynne LLP, Seattle, WA, for amicus curiae Nez Perce Tribe, Stillaguamish Tribe of Indians, Confederated Salish and Kootenai Tribes of the Flathead Reservation, Confederated Tribes of the Siletz Indians of Oregon, Duckwater Shoshone Tribe, and the National Congress of American Indians.Timothy Ward Woolsey, Nespelem, WA, for amicus curiae Confederated Tribes of the Colville Indian Reservation.Appeal from the United States District Court for the District of Arizona, David G. Campbell, District Judge, Presiding. D.C. No. 2:08–CV–00474–DGC.Before: RICHARD C. TALLMAN and CONSUELO M. CALLAHAN, Circuit Judges, and SUZANNE B. CONLON,^* District Judge.

OPINION

PER CURIAM:

A tribal court system exercised jurisdiction over a non-Indian closely held corporation and its non-Indian owner in an unlawful detainer action for breach of a lease of tribal lands and trespass. It entered judgment in favor of the tribe. We examine the extent of an Indian tribe's civil authority over non-Indians acting on tribal land within the reservation. We hold that under the circumstances presented here, where there are no sufficient competing state interests at play, Nevada v. Hicks, 533 U.S. 353, 359–60, 121 S.Ct. 2304, 150 L.Ed.2d 398 (2001), the tribe has regulatory jurisdiction through its inherent authority to exclude, independent from the power recognized in Montana v. United States, 450 U.S. 544, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981). Because regulatory jurisdiction exists, we also consider whether adjudicative jurisdiction exists. In light of Supreme Court precedent recognizing tribes' inherent civil authority over non-Indian conduct on tribal land and congressional interest in promoting tribal self-government, we conclude that it does. Finally, applying traditional personal jurisdiction principles, we hold that in this instance, the tribal court has personal jurisdiction over a non-Indian agent acting on tribal land.

I

In 1975, the Colorado River Indian Tribes (“CRIT”) and Water Wheel Camp Recreational Area, Inc. (“Water Wheel”) entered into a thirty-two-year business lease of twenty-six acres of CRIT tribal land located within the reservation along the California side of the Colorado River. The land is held in trust by the United States and the local Superintendent of the Bureau of Indian Affairs (“BIA”) approved the lease under the authority delegated by the Secretary of the Department of the Interior, as required by law.¹ See 25 U.S.C. § 415(a) (2006). Throughout the term of the lease, Water Wheel operated a recreational resort on the leased tribal land that included a marina, convenience store, bar, trailer and camping spaces, and related facilities.

Robert Johnson, a non-Indian, purchased from non-Indian owners half of Water Wheel's stock in 1981 and the remaining stock in 1985, at which point he became president of the corporation. He controlled and operated the Water Wheel resort on CRIT land for more than twenty-two years while living at the site. Under the lease agreement, he collected rents from the resort's subtenants and paid that rent to the tribe. The lease called for renegotiation of the minimum base rental value after twenty-five years to more accurately reflect the current market value, but in 2000, when it was time to renegotiate, the CRIT and Johnson (acting on behalf of Water Wheel) failed to reach an agreement. After that, Water Wheel stopped making payments as required by the lease. Beginning in 2001, the corporation stopped paying the required percentage of gross business receipts. It paid only nominal rent in 2003 and 2004, and failed to pay any rent at all beginning in 2005.

When the lease expired on July 6, 2007, Water Wheel and Johnson failed to vacate the property “peaceably and without legal process” as the lease required. Instead, Johnson continued to operate Water Wheel and collect funds from resort patrons, but paid nothing to the tribe. When he refused to vacate, the CRIT filed suit against Water Wheel and Johnson in tribal court for eviction, unpaid rent, damages from the tribe's loss of use of their property, and attorney's fees. Johnson and Water Wheel challenged both the tribe's right to evict them and the jurisdiction of the CRIT tribal courts. They moved to dismiss, arguing in relevant part that the tribal court lacked subject matter jurisdiction under Montana, 450 U.S. 544, 101 S.Ct. 1245, and lacked personal jurisdiction over Johnson.

The tribal court denied the motions to dismiss and, following a three-day trial on the merits, ruled in favor of the CRIT on all claims. The tribal court found that because Water Wheel had entered into a consensual relationship with the tribe through commercial dealings, the court had subject matter jurisdiction over Water Wheel under Montana's first exception.² Regarding Johnson himself, the tribal court reasoned that it had subject matter jurisdiction over the breach of lease under Montana's first exception and that it had personal jurisdiction over him because Johnson had “sufficient minimum contacts” with the CRIT to support the exercise of jurisdiction. Specifically, the court determined that Johnson's business dealings and his continuing trespass after the lease expired provided sufficient contacts necessary to establish personal jurisdiction. The court further reasoned that it had subject matter jurisdiction over Water Wheel and Johnson through its own laws and ordinances for purposes of eviction and assessing damages.

Finally, the tribal court noted that Water Wheel and Johnson had repeatedly and willfully disobeyed pretrial orders compelling discovery of financial and corporate records. As a sanction, the court found as true the tribe's contention that Water Wheel and Johnson were “alter egos” and, pursuant to tribal rules of civil procedure that mirror the Federal Rules of Civil Procedure, that the facts embraced in the discovery requests were established as the tribe had claimed. Specifically, the tribal court found that Water Wheel was inadequately capitalized; that the corporation and Johnson had made gifts to each other since 1999 in fraud of creditors; and that Johnson borrowed funds for his own personal use, failed to maintain separate financial records, failed to keep formal corporate board meeting minutes, failed to elect directors, and had commingled corporate money with his own personal assets instead of paying the rent. In light of these factual findings, the tribal court pierced the corporate veil to hold Johnson personally and jointly liable for all damages related to breach of the lease agreement.

The tribal court of appeals affirmed.³ In a fifty-eight-page opinion, the appellate court held that the CRIT had subject matter jurisdiction both through its inherent sovereign authority and through the first and second Montana exceptions. The court noted the importance the Supreme Court has placed on land ownership in determining questions of civil jurisdiction. It also observed that in light of the long-recognized power of Indian tribes to exclude non-Indians from Indian-owned land, the Court has, with one narrow exception, “consistently upheld the exercise of tribal authority over non-member activity on tribal or other Indian owned land within an Indian reservation” (emphasis in original).

The appellate court further determined that Montana's first exception was satisfied because the possessory claims of Water Wheel and Johnson flowed solely from a federally approved surface lease of lands owned by the tribe within its reservation and thus clearly constituted a consensual relationship. Additionally, the court found that Montana's second exception was satisfied because substantial tribal revenues were at stake and because, “[f]or the Tribe, as for most Indian tribes, its land constitutes its single most valuable economic asset,” and the activities of Johnson and Water Wheel interfered with the tribe's ability to manage and use its own land.

Regarding personal jurisdiction over Johnson, the court found that in agreeing to and benefitting from the lease, Johnson had consented to the tribal court's exercise of jurisdiction. For purposes of the trespass claim, the court found that the damages were properly directed at Johnson as an individual because he had overstayed the lease. The court also noted that both Water Wheel and Johnson had been properly...