Colombe v. Rosebud Sioux Tribe

918 F.Supp.2d 952

Charles COLOMBE, Individually and as an Officer of BBC Entertainment, Inc., a dissolved Minnesota corporation, Plaintiff,

v.ROSEBUD SIOUX TRIBE, Rosebud Sioux Tribal Court, and Judge Sherman Marshall, in his Official and Individual Capacities, Defendants.

No. CIV 11–3002–RAL.

United States District Court,

D. South Dakota,

Central Division.

Jan. 18, 2013.

Clint L. Sargent, Meierhenry Sargent, LLP, Sioux Falls, SD, for Plaintiff.

Dana Hanna, Rapid City, SD, for Defendants.

OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

ROBERTO A. LANGE, District Judge.

I. INTRODUCTION

Plaintiff Charles Colombe, a shareholder, director, and officer of BBC Entertainment, Inc. (“BBC”) filed a Complaint against Defendants Rosebud Sioux Tribe (“the Tribe”), Rosebud Sioux Tribal Court, and Judge Sherman Marshall (collectively “Defendants”). Doc. 1. Both parties have filed motions for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Doc. 48; Doc, 58. Colombe's motion for summary judgment seeks a ruling that the Supreme Court of the Rosebud Sioux Tribe lacked jurisdiction to determine that the oral modification of a casino management contract was invalid. Doc. 48. Colombe contends that summary judgment is proper because the Tribe sued in Rosebud Sioux Tribal Court based on the Indian Gaming Regulatory Act (“IGRA”) and IGRA does not create a private cause of action. Doc. 48. Colombe requests this Court vacate the Tribal Court judgment for lack of jurisdiction and prevent action to satisfy the Tribal Court judgment. Doc. 48. Defendants oppose Colombe's motion for summary judgment, Doc. 57, and have filed their own motion for summary judgment on Colombe's Complaint. Doc. 58. Defendants argue that the Tribal Court had jurisdiction to determine whether an oral modification to a management contract required approval by the National Indian Gaming Commission (“NIGC”) and to declare an unapproved modification contract void. Doc. 58.

On August 17, 2011, 2011 WL 3654412, this Court issued an Opinion and Order Regarding Motion to Dismiss resolving part of the issues and requiring submission of a tribal resolution missing from the record that affected this Court's analysis of waiver of tribal sovereign immunity. Doc. 21. On September 23, 2011, this Court issued an Opinion and Order Granting in Part and Denying in Part Defendants' Motion to Dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Doc. 33. ¹ This Court now denies Colombe's Motion for Summary Judgment and grants Defendants' Motion for Summary Judgment.

II. FACTS

The Rosebud Sioux Tribe (“the Tribe”) is a federally recognized Indian tribe that owns and operates a casino on tribal trust land within the exterior boundaries of the Rosebud Sioux Reservation. Doc. 1 at 3; Doc. 11 at 2. BBC is a now-dissolved Minnesota corporation that was owned in part by tribal member Charles Colombe. Doc. 1 at 2. In June of 1994, the Tribe and BBC entered into a five-year casino management contract ² (“the Contract”) pursuant to the Indian Gaming Regulatory Act of 1988, 25 U.S.C. §§ 2701, et seq. Article 6.4(c)(5) of the Contract required that BBC fund an initial Operation Expense Reserve (“OER”) account. Doc. 9–1 at 37–38; Doc. 9–7 at 20. Although BBC never made an initial contribution to the OER account, the Tribe and BBC reached a subsequent oral agreement to contribute 7.5% of the casino's net profits to the account each month. Doc. 9–4 at 4; Doc. 9–7 at 24–25. At conclusion of the Contract, BBC withdrew $415,857.00 from the OER account based on BBC's belief that it was entitled to 35% of the OER account balance, consistent with the Contract's division of net profits with 65% going to the Tribe and 35% to BBC, Doc. 9–4 at 4.

The Tribe disputed BBC's withdrawal of the $415,857.00 and brought suit against BBC in Tribal Court. Before Special Tribal Court Judge B.J. Jones, the Tribe argued that the oral modification concerning how to fund the OER account did not comport with IGRA and its implementing regulations. Doc. 9–4 at 4–5. IGRA established a statutory basis for the regulation and operation of gaming by Indian tribes and created the NIGC to oversee Indian gaming. 25 U.S.C. § 2702. Subject to the approval of the Chairman of the NIGC, Indian tribes may enter into management contracts for the operation and management of a tribe's gaming facilities. 25 U.S.C. § 2711. Once the NIGC Chairman has approved a casino management contract, any attempt by the parties to modify the contract is void without further Chairman approval. 25 C.F.R. § 535.1. The NIGC Chairman approved the Contract in June of 1994, but no one sought approval of the later oral modification concerning funding the OER account. Doc. 9–1 at 6. The Tribe thus contended that the modification was void and that because BBC did not make an initial contribution to the OER account, BBC was not entitled to any of the money in the account. Judge Jones disagreed with the Tribe, instead finding that “nothing in the agreement prohibited the parties from using their respective net earnings to fund an account such as the OER account....” Doc. 9–2 at 11.

The Tribe appealed Judge Jones's decision to the Supreme Court of the Rosebud Sioux Tribe. Doc. 9–4. In its appellate brief, BBC argued that IGRA does not create a private right of action and suggested that jurisdiction to determine the legality of the Contract modification rested with the NIGC rather than the Tribal Court.³ Doc. 9–3. The Rosebud Sioux Tribal Supreme Court found that the oral agreement to fund the OER account through mutual monthly contributions was void for failure to obtain the approval of the NIGC and remanded the case to Judge Jones for an accounting. Doc. 9–4. The Court did not directly address BBC's jurisdictional argument. Doc. 9–4.

The Tribe subsequently sought a rehearing en banc, contending that the Rosebud Sioux Tribal Supreme Court's order remanding the case to Judge Jones contained certain mistakes of law and fact. Doc. 9–6. The Rosebud Sioux Tribal Supreme Court granted the motion for a rehearing en banc, but limited the rehearing “to the sole issue of the appropriate remedy for BBC Entertainment, Inc.'s ... breach of the management contract in regard to the funding of the [OER] account.” Doc. 9–6 at 2. In its brief on rehearing, BBC asserted that the Rosebud Sioux Tribal Supreme Court had failed to discuss BBC's jurisdictional argument in its initial remand order and argued that only the NIGC had jurisdiction to determine whether there had been an illegal modification of the Contract. Doc. 9–5. Following the rehearing en banc, the Rosebud Sioux Tribal Supreme Court issued a Summary Order that affirmed the Court's earlier remand to Judge Jones without discussing BBC's jurisdictional argument. Doc. 9–6.

On October 16, 2007, Judge Jones granted the Tribe a judgment against BBC in the amount of $399,353.61, plus interest accrued from August 15, 1999, in the amount of $127,793.15. Doc. 9–7, BBC filed a motion for a new trial, Doc. 9–9, which was denied for failure to adhere to the Rosebud Sioux Tribe Rules of Civil Procedure. Doc. 9–10. BBC did not appeal the judgment.

On February 17, 2009, the Tribe filed a Tribal Court complaint against BBC and two of its owners, Wayne Boyd and Charles Colombe. Doc. 5–1. The complaint sought to pierce BBC's corporate veil and to hold Boyd and Colombe personally liable for the earlier judgment against BBC. Doc. 5–1. On March 24, 2009, Colombe responded with a motion to dismiss arguing, among other things, that the underlying judgment against BBC was void because the Tribal Court violated IGRA and illegally amended an NIGC-approved management contract. Doc. 5–6. Tribal Judge Sherman Marshall denied Colombe's motion to dismiss, Doc. 5–25, and later ordered Colombe to respond to written discovery by January 22, 2011. Doc. 5–46.

On January 12, 2011, Colombe filed a two-count Complaint before this Court against the Rosebud Sioux Tribe, Rosebud Sioux Tribal Court, and Judge Sherman Marshall. Doc. 1. Count I of the Complaint sought a de novo review of whether BBC and Colombe violated the Management Agreement. Doc. 1 at 13. Colombe asked this Court to vacate the October 16, 2007 judgment and damage award. Doc. 1 at 14. Count II sought an injunction prohibiting the Rosebud Sioux Tribe from continuing litigation to recover on the October 16, 2007 judgment in Tribal Court. Doc. 1 at 14.

In an Opinion and Order dated September 23, 2012, this Court held that Colombe had not exhausted his Tribal Court remedies as to issues relating to Judge Jones's October 16, 2007 decision. Doc. 33 at 17. Colombe and BBC “never appealed the October 16, 2007 decision granting the Tribe a judgment against BBC.” Doc. 33 at 17–18. This Court dismissed all of Colombe's claims concerning the October 16, 2007 decision. Doc. 33 at 18. This Court did find exhaustion as to the “the limited issue of the [T]ribal [C]ourt's jurisdiction to find an illegal modification of the contract.” Doc. 33 at 16.

Colombe now asks this Court to rule on the sole remaining issue from this Court's September 23, 2012 Opinion and Order: Whether the Tribal Court had jurisdiction to hold that the oral modification to the NIGC-approved management contract was void. Colombe argues that the NIGC has the sole, exclusive authority to determine whether modifications to NIGC-approved management contracts can have any legal effect. Doc. 49 at 6–7. Colombe also argues that Defendants' Tribal Court suit is prohibited because IGRA does not authorize a private cause of action. Doc. 49 at 8. Defendants counter that the Rosebud Sioux Tribal Supreme Court had jurisdiction to rule on the legal validity of the oral, unapproved modification to the approved management contract after Colombe raised the modification as a defense in the Tribe's underlying contract...