Pelt v. Utah

611 F.Supp.2d 1267

Jake C. PELT, et al., for themselves and for and on Behalf of A Class of Persons consisting of all Navajo Indians residing in San Juan County, Utah, including a sub-class of persons consisting of all other Indians the Secretary of Interior saw fit to settle on lands described in the 1933 Act [47 Stat. 1418] prior to May 17, 1968, Plaintiffs, v. State of UTAH, Defendant.

No. 2:92-CV-639-TX.

United States District Court, D. Utah, Central Division.

March 25, 2009.

COPYRIGHT MATERIAL OMITTED

Alan Robert Taradash, Nordhaus Law Firm, Daniel I.S.J. Rey—Bear, Doreen N. Hobson, Jennifer J. Dumas, Nordhaus Haltom Taylor Taradash & Bladh LLP, Albuquerque, NM, Brian M. Barnard, Utah Legal Clinic, John P. Pace, Salt Lake City, UT, for Plaintiffs.

Philip S. Lott, David N. Sonnenreich, Utah Attorney General's Office, Debra J. Moore, Administrative Office of the Courts, Salt Lake City, UT, for Defendant.

ORDER AND MEMORANDUM DECISION

TENA CAMPBELL, Chief Judge.

Beneficiaries of the Navajo Trust Fund ("NTF" or "Trust Fund") filed this class action against the NTF trustee, Defendant State of Utah, seeking relief for alleged mismanagement of Trust Fund monies. They seek an equitable accounting of Trust Fund income and expenditures and replenishment of Trust Fund resources lost through any proven breach of fiduciary duty.

This matter comes before the court on cross motions concerning the State of Utah's laches and statute of limitations defenses.¹ Utah, in a motion requesting reconsideration of the court's 1999 Order dismissing the two defenses, contends that dismissal was incorrect and that the two defenses should be reinstated in its Answer. Plaintiffs contend not only that the 1999 dismissal was correct but that even if the court reinstates the defenses, the merits of Utah's defenses should be decided now in Plaintiffs' favor because the defenses are not valid as a matter of law or fact.

Although the parties raise many issues, the court finds that only the following questions need be decided. First, are the Plaintiffs seeking solely equitable remedies? Second, is the State of Utah entitled as a matter of law to assert the affirmative defenses of laches and statute of limitations? Third, if so, are the Plaintiffs entitled at this time to summary judgment disposing of the two affirmative defenses?

For reasons set forth below, the court vacates the 1999 Order because the State of Utah adequately pleaded the affirmative defenses of laches and statute of limitations in its Answer, which should not have been dismissed on a motion for judgment on the pleadings. But, because both defenses fail as a matter of law and fact, Plaintiffs' Motion for Summary Judgment² is GRANTED and the State's laches and statute of limitations defenses are dismissed with prejudice on the merits.

I. PROCEDURAL AND FACTUAL BACKGROUND

A. Establishment of the Navajo Trust Fund

In 1933, Congress established the Navajo Trust Fund (NTF) through legislation which imposed certain trust responsibilities on the State of Utah. The corpus of the NTF comes from 37½ % of net royalties derived from exploitation of oil and gas deposits under the Navajo Reservation's Aneth Extension (the ancestral home of Navajo Indians and other Native Americans). According to the 1933 statute, the 37½ % net royalties were to be paid to the State of Utah, which was then required to spend those royalties for the health, education, and general welfare of the Indians residing in the Aneth Extension. Congress later expanded the beneficiary class to include all Navajo Indians living in San Juan County, Utah. See An Act to Permanently Set Aside Certain Lands In Utah As An Addition To The Navajo Reservation, And For Other Purposes, 47 Stat. 1418 (1933), amended by Pub.L. No. 90-306, 82 Stat. 121 (1968) (hereinafter "1933 Act"); see also Pelt v. Utah, 104 F.3d 1534, 1538-39 (10th Cir.1996), The 1933 Act, as amended, reads in relevant part as follows;

Should oil or gas be produced in paying quantities within the lands hereby added to the Navajo Reservation, 37½ per centum of the net royalties accruing therefrom derived from tribal leases shall be paid to the State of Utah: Provided, That said 37½ per centum of said royalties shall be expended by the State of Utah for the health, education, and general welfare of the Navajo Indians residing in San Juan County.

47 Stat. 1418 (1933), as amended by 82 Stat. 121 (1968).

The corpus of the NTF was created in approximately 1959, when the oil and gas leases began generating royalty income. Since then, the State has been administering the NTF.

B. Beneficiaries' Previous Lawsuits Seeking An Accounting from the State of Utah as Trustee of the NTF

Since the NTF was established, the State of Utah (on its own or through its agency the Utah Board of Indian Affairs (previously known as the Utah State Indian Affairs Commission)) was a defendant in three previous lawsuits brought by different beneficiaries of the NTF: Sakezzie v. Utah State Indian Affairs Commission et al. ("Sakezzie") (filed in 1961), Jim v. State of Utah et al. ("Jim") (filed in 1970), and Bigman v. Utah Navajo Development Council, Inc. et al. ("Bigman") (filed in 1977).

In the case here, the State of Utah raised a res judicata defense based on the earlier litigation. But in 2006, the court ruled that the Plaintiffs' claims were not barred by the doctrine of res judicata (claim preclusion) because the Plaintiffs were not adequately represented in any of the three previous lawsuits (Sakezzie, Jim, and Bigman) filed by other beneficiaries against the State of Utah concerning the NTF. (Am. Order & Mem. Decision (Docket No. 1043).) The Tenth Circuit affirmed the decision in 2008. Pelt v. Utah, 539 F.3d 1271 (10th Cir.2008).

Given the res judicata ruling, the State of Utah must account for NTF income and expenditures for the years dating back to approximately fiscal year 1960 (ending June 30, 1960) when oil and gas royalty revenues were first deposited into the NTF up until 1992, when the Plaintiffs filed their Verified Complaint.

Now the State points to the three lawsuits as evidence that the Plaintiffs knew, or should have known, that they had a claim against the State of Utah but waited too long to file the case here, and so their claims are time-barred. Because some of the facts surrounding those three cases (in which the plaintiffs sought an accounting from the State of Utah) are relevant to the issue of laches, the court will repeat them here.

1. The 1961 Case of Sakezzie v. Utah State Indian Affairs Commission et al.

The Sakezzie complaint was filed in the District of Utah on April 2, 1961, on behalf of the named plaintiffs and "as representatives of and members of the class of persons who are Navajo Indians residing within the Aneth Extension of the Navajo Indian Reservation in San Juan County Utah." (Sakezzie Compl. at 1 (in caption), attached as Ex. U to Docket No. 972.)³ In their complaint, the Sakezzie plaintiffs requested an accounting of all Trust Fund monies and alleged that none of the expenditures had been for their use and benefit. (See id. at p. 2 ¶¶ 5 & 7, and p. 6 ¶ 2.) The case was tried to the court without a jury on June 12, 1961. The court gave an oral opinion in which it stated that "[t]he matter of accounting has been rendered moot by pretrial discovery" in which the defendants had answered some of plaintiffs' interrogatories with abbreviated explanation of expenditures from the Trust Fund, none of which was supported by backup documentation. (See June 12, 1961 Oral Opinion of the Court at 18-19, attached as Ex. 3 to Docket No. 870; Sakezzie Defs.' Answer to Pls.' Interrogatories, attached as Ex. BB to Docket No. 972).

On August 25, 1961, the Sakezzie court entered written Findings of Fact and Conclusions of Law, in which it found that the Utah defendants "have not kept the plaintiffs and those represented by them reasonably informed concerning the amounts received in said fund and as to expenditures from said fund; but in the course of this proceeding have fully informed the plaintiffs of such receipts and expenditures." Sakezzie v. Utah Indian Affairs Comm'n, 198 F.Supp. 218, 222 (D.Utah 1961) ("Sakezzie I"). But the court emphasized that the State's proper administration of the Trust Fund in the future should include an accounting that contains "reasonably accurate, complete and current information concerning the receipts[,] expenditures and projects of the defendants." Id. at 225-26. Plaintiffs did not appeal the court's findings of fact and conclusions of law.

A year later, on July 2, 1962, the Sakezzie plaintiffs filed a post-judgment petition for injunctive relief to enforce the court's 1961 judgment and, decree,⁴ specifically alleging that the State was refusing to provide information concerning receipts and disbursement of the Trust Fund. The plaintiffs sought monthly reports of receipts and expenditures. (See Sakezzie Pls.' July 2, 1962 Petition at 2-5, attached as Ex. 4 to Docket No. 870.) The Sakezzie court issued a Memorandum of Decision on February 7, 1963, in which it found that "defendants ... have demonstrated remarkable unconcern about keeping the beneficiaries of the fund informed of accretions to said fund, about disbursements and commitments therefrom and about plans with respect to future expenditures ...." Sakezzie v. Utah Indian Affairs Comm'n, 215 F.Supp. 12, 18 (D.Utah 1963) ("Sakezzie II"). The court further stated that

[i]t is clear to the court that the defendants have not discharged their duty [to submit monthly reports to the plaintiffs.] ... [A]nd it is no answer to say that the information could be ferreted out from their records by the plaintiffs.... It does not seem unreasonable, indeed it seems essential, to recognize that a program for the affirmative disclosure of available information as to the plaintiffs is indispensable for the proper discharge of the defendants' trust.... Id. at 18-19 ...