World Touch Gaming v. Massena Management, LLCv

• Decision Date: 13 October 2000
• Docket Number: No. 99-CV-2214.,99-CV-2214.
• Citation: 117 F.Supp.2d 271
• Parties: WORLD TOUCH GAMING, INC., Plaintiff, v. MASSENA MANAGEMENT, LLC and Massena Management Corp. d/b/a President R.C.—St. Regis Management Company as Agent for Akwesasne Mohawk Casino and Akwesasne Mohawk Casino, and St. Regis Mohawk Tribe, Defendants.
• Court: U.S. District Court — Northern District of New York

117 F.Supp.2d 271

WORLD TOUCH GAMING, INC., Plaintiff, v. MASSENA MANAGEMENT, LLC and Massena Management Corp. d/b/a President R.C.—St. Regis Management Company as Agent for Akwesasne Mohawk Casino and Akwesasne Mohawk Casino, and St. Regis Mohawk Tribe, Defendants.

No. 99-CV-2214.

United States District Court, N.D. New York.

October 13, 2000.

Plunkett & Jaffe, P.C., White Plains, NY, Robert Hermann, Patrick E. Brown, of counsel, for Plaintiff.

Cullen & Dykman, Garden City, NY, Peter J. Mastaglio, of counsel, for Defendants Massena Management LLC & Massena Management Corp.

Lehtinen, O'Donnell, Vargas & Reiner, P.A., Miami, FL, William K. Hoyt, of counsel, for Defendants St. Regis Mohawk Tribe & Akwesasne Mohawk Casino,

MEMORANDUM-DECISION and ORDER

HURD, District Judge.

Plaintiff World Touch Gaming, Inc. ("World Touch") filed the instant action on December 22, 1999, alleging breach of contract by defendants. World Touch filed an amended complaint on May 4, 2000. Defendants Massena Management, LLC; Massena Management Corp. d/b/a President R.C.-St. Regis Management Company¹ ("Management Company"); Akwesasne Mohawk Casino ("the Casino"); and St. Regis Mohawk Tribe ("the Tribe") move to dismiss the amended complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). Plaintiff opposes the motion. Oral argument was heard on June 9, 2000, in Utica, New York. Decision was reserved.

I. FACTS

The Tribe is a federally-recognized American Indian Tribe whose lands, known as Akwesasne, were reserved to the Tribe by treaty with the United States. The Tribe is governed by its Constitution. In part the Constitution provides that "the Tribe is immune from suit except to the extent that the Tribal Council expressly waives sovereign immunity ...." Moreover, the Tribe's Civil Judicial Code provides, inter alia, the following:

Tribal sovereign immunity is hereby found and stated to be an essential element of self-determination and self-government, and as such will be waived by the Mohawk Tribal Council only under such circumstances as the Mohawk Tribal Council finds to be in the interests of the Tribe in promoting economic or commercial development or for other tribal purposes. Any such specific waivers of sovereign immunity as may from time to time be executed must be clear, explicit and in writing; any such waivers shall be interpreted narrowly and limited to the explicit terms of the waivers; and any such waivers shall not by implication or interpretation be extended in any manner or fashion beyond their narrow, explicit terms.

The Tribe operates a gaming enterprise, the Casino, which is a wholly owned unincorporated subsidiary of the Tribe. The Tribe operates the Casino pursuant to a gaming compact with New York State, as required by the Indian Gaming Regulation Act ("IGRA"), 25 U.S.C. §§ 2701-2721. The Tribe entered into an agreement with the Management Company, pursuant to which the Management Company would be the managing agent for the Tribe and operate the Casino under the supervision of the Tribe.² According to the sworn testimony of Angus N. McDonald, Executive Director of the Tribe, "The Tribe has never authorized anyone form [sic] the Casino Management to waive the Saint Regis Mohawk Tribe's sovereign immunity. Such an authorization could only be made by resolution of the Tribal Council. No such resolution exists to my knowledge." (McDonald Aff. ¶ 8.)

On May 20, 1999, after some months of selection and negotiation, World Touch and the Casino entered into agreements for the lease and purchase of gallery-style pull tab gaming machines for use in the Tribe's gaming enterprise ("the Lease Agreement" and the "Sales Agreement"). Walter Horn, Senior Vice President of the Management Company, signed the Lease and Sales Agreements as the managing agent of the Casino.

The Lease Agreement provides, inter alia, that the "Lessee [Casino] agrees to waive its Sovereign Immunity from suit to enforce the provisions of this Agreement and acknowledges that this waiver allows Lessor [World Touch] the right to pursue both legal and equitable remedies as Lessor deems necessary." The Sales Agreement provides as follows:

The parties recognize that the Tribe, being a federally recognized Indian tribe, is a sovereign entity dedicated to promoting the general welfare of its members and their descendants the blessings of liberty and freedom. Nothing in this agreement shall be construed to limit or diminish that sovereignty nor to abridge or waive any sovereign rights, privileges or immunities of the Tribe, its agencies, divisions, corporations or their respective officers and representatives. Notwithstanding the aforementioned Tribal Sovereignty the Tribe agrees to submit to the jurisdiction of the state and federal courts for the sole and limited purpose of enforcement of the obligations under this contract ....

The Casino was to purchase 181 machines from World Touch for a total of $1,176,500.00, to be paid in four equal installments. World Touch alleges that the second and third installment payments were made late and only after considerable collection efforts. Further, World Touch alleges that the final payment due under the Sales Agreement has not been paid.

The Casino was to lease 120 machines, and pay a twenty percent revenue sharing amount for the ninety-day term of the lease. World Touch alleges that the Casino failed to pay the June 1999 and July 1999 revenue sharing amounts when due under the Lease Agreement. While these payments were eventually made, the Casino allegedly failed to make payment of the August 1999 and September 1999 revenue sharing amounts. Additionally, World Touch alleges that the Casino is in default by its failure to purchase the leased machines after ninety days, as was required by the Lease Agreement. World Touch eventually repossessed the leased equipment. World Touch also claims that it is owed $112,236.89 by the Casino for parts and supply orders, transportation, and installation expenses, pursuant to the Lease and Sales Agreements.

For relief World Touch seeks money damages of at least $2,000,000, an accounting to determine the owed revenue sharing amounts, an injunction prohibiting operation of the machines while payment is due, and costs and attorneys fees.

II. DISCUSSION

A. Fed.R.Civ.P. 12(b)(1) Motion to Dismiss Standard

An action must be dismissed when the court lacks jurisdiction over the subject matter. Fed.R.Civ.P. 12(b)(1), (h)(3); United Food & Commercial Workers Union, Local 919 v. CenterMark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir.1994). The party asserting subject matter jurisdiction has the burden of proving that such jurisdiction exists. United Food & Commercial Workers Union, Local 919, 30 F.3d at 301; Greenery Rehabilitation Group, Inc. v. Sabol, 841 F.Supp. 58, 61 (N.D.N.Y.1993)(citing Thomson v. Gaskill, 315 U.S. 442, 62 S.Ct. 673, 86 L.Ed. 951 (1942)). When faced with a motion to dismiss for lack of jurisdiction, the party cannot "rest on [the] mere assertion that factual issues exist." Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126, 1131 (2d Cir. 1976). Rather, the party asserting jurisdiction should be permitted discovery of facts relevant to the jurisdictional issue, particularly "where the facts are peculiarly within the knowledge of the opposing party." Greenery Rehabilitation Group, Inc., 841 F.Supp. at 61; see Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir.1986). The parties may submit affidavits in support of and in opposition to a jurisdictional motion, for the court's consideration. United Food & Commercial Workers Union, Local 919, 30 F.3d at 301; Exchange Nat'l Bank of Chicago, 544 F.2d at 1131; Greenery Rehabilitation Group,Inc., 841 F.Supp. at 61 (citing Kamen, 791 F.2d at 1011). The proof of jurisdictional facts must be competent, United Food & Commercial Workers Union, Local 919, 30 F.3d at 301, and guidance regarding the proof can be taken from Fed.R.Civ.P. 56, Kamen, 791 F.2d at 1011. Finally, a motion brought pursuant to Fed.R.Civ.P. 12(b)(1) must be considered before any other motions, as a finding of lack of jurisdiction would render other objections and defenses moot. Rhulen Agency, Inc. v. Alabama Ins. Guaranty Ass'n, 896 F.2d 674, 678 (2d Cir.1990).

B. Sovereign Immunity & Waiver

Defendants contend that subject matter jurisdiction is lacking due to the sovereign immunity of the Tribe, and likewise of the Casino because it is a wholly owned unincorporated enterprise of the Tribe. Plaintiff argues that the Tribe waived its sovereign immunity under the terms of both the Lease Agreement and the Sales Agreement which were signed by Walter Horn, Senior Vice President of the Management Company. In response, the defendants argue that Walter Horn had no authority to waive the Tribe's sovereign immunity and that, as subject matter jurisdiction is lacking over the Tribe and the Casino, and they are indispensable parties, any claims against the Management Company should be dismissed pursuant to Fed.R.Civ.P. 19(b).

The parties agree that the Tribe enjoys sovereign immunity. That being so, the Tribe is immune from suit, absent authorization by Congress, unless it has waived its sovereign immunity. Kiowa Tribe of Oklahoma v. Manufacturing Tech., Inc., 523 U.S. 751, 754, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998); see United States v. United States Fidelity & Guaranty Co., 309 U.S. 506, 512-13, 60 S.Ct. 653, 84 L.Ed. 894 (1940). This immunity extends to tribal enterprises. Kiowa Tribe of Oklahoma, 523 U.S. at 757-58, 118 S.Ct. 1700 (citing Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114 (1973); Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 111 S.Ct. 905, 112 L.Ed.2d 1112 (1991); Seminole Tribe of Florida v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996)). Thus, the Tribe and the Casino are immune...