F I L E D United States Court of Appeals Tenth Circuit PUBLISH June 22, 2005 UNITED STATES COURT OF APPEALS PATRICK FISHER Clerk TENTH CIRCUIT
FIRST AMERICAN KICKAPOO OPERATIONS, L.L.C., a Nevada Limited Liability Company,
Plaintiff-Appellant, v. No. 03-6283 MULTIMEDIA GAMES, INC.,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. NO. 01-CIV-1395-F)
Harvey D. Ellis, Jr. (Jimmy K. Goodman and David V. Stewart with him on the brief), Crowe & Dunlevy, Oklahoma City, Oklahoma, for Plaintiff-Appellant.
John F. Heil, III (T. Lane Wilson with him on the brief), Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., Tulsa, Oklahoma, for Defendant-Appellee.
Before O’BRIEN, PORFILIO, and McCONNELL, Circuit Judges.
McCONNELL, Circuit Judge. Plaintiff First American Kickapoo Operations appeals the district court’s
grant of summary judgment on its claim for tortious interference with contract.
We AFFIRM.
I. Factual Background
The Indian Gaming Regulatory Act (“IGRA”) establishes a statutory basis
for the operation and regulation of gaming by Indian tribes to “promot[e] tribal
economic development, self-sufficiency, and strong tribal governments,” while
simultaneously “shield[ing tribes] from organized crime and other corrupting
influences [and] ensur[ing] that . . . Indian tribe[s are] the primary beneficiar[ies]
of . . . gaming operations.” 25 U.S.C. § 2702. The IGRA effects these goals in
part by providing for federal oversight of contracts between tribes and non-tribal
entities for the management of tribal gaming operations. Tribes may enter into
contracts for the management of these gaming operations only with the approval
of the National Indian Gaming Commission (“NIGC”) Chairman. 25 U.S.C. §
2711(a)(1). 1 Unapproved management contracts are void, 25 C.F.R. § 533.7, and
a gaming operation that violates any provision of the IGRA is subject to closure
and fines of up to $25,000 per violation. 25 U.S.C. § 2713.
On April 30, 2001, the Kickapoo Tribe of Oklahoma entered into an
1 A management contract is a contract that “provides for the management of all or part of a [tribal] gaming operation.” 25 C.F.R. § 502.15.
2 Operating Lease Agreement with First American. The Operating Lease provided
for constructing, equipping, and operating a Class II casino on tribal land. 2 First
American agreed to construct the casino and lease all the gaming equipment it
required. The Tribe agreed to repay, without interest, the costs of construction,
although First American guaranteed a monthly payment to the Tribe of $20,000
which took precedence over repaying the construction loan. In return for lease of
the gaming equipment, First American was to be paid forty percent of the
operation’s net revenues. First American indicates that it spent $859,545.90
“establishing and developing” the casino, which opened May 23, 2001. On June
13, 2001, the NIGC notified the Tribe that its gaming ordinances did not comply
with the requirements of the IGRA. The Tribe voluntarily closed the casino, and
on June 30, 2001 passed gaming ordinances that subsequently met with NIGC
approval. Also in June 2001, the Tribe submitted the Operating Lease to the
NIGC for an opinion as to whether the Operating Lease was a management
contract requiring NIGC approval. In a letter dated June 29, 2001, Deputy
General Counsel for the NIGC offered her opinion that the Operating Lease was a
management contract. On July 27, 2001, the Tribe’s business committee
2 The IGRA divides Indian gaming into three classes. Class I consists of traditional forms of gaming associated with ceremonies and celebrations, Class II consists primarily of bingo and related games, and Class III encompasses all other forms of gaming, including slot machines. 25 U.S.C. § 2703.
3 unanimously decided to terminate the Tribe’s relationship with First American.
On August 17, 2001, the Tribe executed a letter of intent with Multimedia Games,
and subsequently entered into a non-exclusive agreement to rent gaming
equipment from Multimedia.
II. Procedural History and Standard of Review
The Operating Lease provides that any claim arising out of or related to it
must be adjudicated in the Tribe’s courts; First American has brought suit against
the Tribe in tribal court. Art. 11(A). In addition, First American filed suit
against Multimedia in Oklahoma state court, requesting injunctive relief and
damages for tortious interference with contractual and business relations.
Multimedia removed the case to federal court, where First American’s motion for
a preliminary injunction was denied.
In March 2002, Multimedia moved for summary judgment on First
American’s claim of tortious interference with contract, arguing that the
Operating Lease fell within the regulations’ definition of a management contract
and was therefore void for lack of NIGC approval. Multimedia maintained that a
void contract cannot serve as a predicate for a claim for tortious interference with
contract and that summary judgment was therefore appropriate on this claim. The
district court denied the motion in May 2002, holding that “the language of the
Operating Lease is ambiguous with respect to whether that agreement provides for
4 management of [the gaming operation] by First American.” Order of May 8, 2002
at 3.
On the same day in June 2003, both parties moved for summary judgment.
First American urged the court to find that any provisions in the Operating Lease
providing for management were severable, and that the remainder constituted a
valid construction loan and equipment lease. Multimedia moved for summary
judgment on both the tortious interference with contract and tortious interference
with business relations claims, but on grounds unrelated to the validity of the
Operating Lease. The district court denied both motions on July 17, 2003,
holding with regard to First American’s motion that the operation of a severability
clause in the Operating Lease depended on the parties’ intentions and other
disputed fact questions. Neither party moved for summary judgment again.
While the district court never explicitly revised its holding that the
Operating Lease was ambiguous, between July and September 2003 the district
court and the parties appear to have experienced a change of mind on the issue.
In an order following a pretrial conference, the district court stated that “[t]he
parties are in agreement that the determination as to whether the agreement is a
management contract is a question of law for the court.” Order of Sept. 2, 2003
at 3. The district court invited the parties to submit whatever extrinsic evidence
they thought relevant to the question. The court determined the Operating Lease
5 to be an unapproved management contract and therefore void, “leav[ing] the
plaintiff with a claim based on the existence of a ‘business relationship.’” Order
of Sept. 6, 2003 at 3. First American accordingly tried its remaining claim for
tortious interference with business relations to a jury, which found for
Multimedia.
First American appeals the district court’s order rejecting its claim for
tortious interference with contractual relations. First, it argues that the Operating
Lease is ambiguous and on that account should have been interpreted by a jury.
Second, even if the language of the Operating Lease is unambiguous and
therefore suitable for interpretation as a matter of law, First American maintains
that the district court should have found the Operating Lease not to be a
management contract. Third, even if the lease is an unapproved management
contract, First American insists that it can nevertheless form the basis for a suit
for tortious interference with contract. Finally, First American urges that we
sever those portions of the contract which might make it a management contract,
leaving the remainder of the contract to furnish a basis for its claim for tortious
interference with contract.
The district court did not specify the legal nature of its September 6, 2003
order rejecting First American’s claim for tortious interference with contract. We
conclude, however, that the court granted summary judgment. The order
6 essentially adopts the reasoning put forward by Multimedia’s briefs in support of
its first motion for summary judgment, suggesting that the district court regarded
its order of September 6 as a grant of summary judgment. Moreover, the order
does not resolve any disputed questions of fact.
To be sure, we cannot tell whether the September 6 order was in the nature
of a reconsideration of the district court’s order of May 8, 2002 denying
Multimedia’s first motion for summary judgment, or whether it was a sua sponte
grant of summary judgment. Ultimately, this does not matter, because either
approach would be permissible. A court’s disposition of a single claim in a suit
involving multiple claims is subject to reconsideration until the entry of judgment
on all of the claims, absent an explicit direction for the entry of judgment on the
single claim. Fed. R. Civ. P. 54(b); see also Moses H. Cone Mem. Hosp. v.
Mercury Const. Corp., 460 U.S. 1, 12 (1983) (“[E]very order short of a final
decree is subject to reopening at the discretion of the district judge.”); Paramount
Pictures Corp. v. Thompson Theaters, Inc., 621 F.2d 1088, 1090 (10th Cir. 1980)
(“[T]he court retains the power to alter rulings until final judgment is entered on a
cause.”).
The district court could also have granted summary judgment sua sponte.
While we do not encourage the practice of granting summary judgment sua
sponte, we will not reverse absent evidence of prejudice. So long as “the losing
7 party was on notice that [it] had to come forward with all of [its] evidence,” a sua
sponte grant of summary judgment may be appropriate. Ward v. Utah, 398 F.3d
1239, 1245–46 (10th Cir. 2005) (quoting Celotex Corp v. Catrett, 477 U.S. 317,
326 (1986)). Since Multimedia’s first motion for summary judgment was argued
on precisely the grounds ultimately adopted by the district court, First American
was on notice to provide all of its evidence relevant to this argument. Moreover,
before ruling on whether the Operating Lease was a management contract—the
same ruling that disposed of the tortious interference with contract claim—the
district court invited the parties to proffer any extrinsic evidence they thought
relevant to this question. Order of Sept. 2, 2003 at 2.
While it would have facilitated appellate review for the district court to be
more explicit about what it was doing, the district court did not commit reversible
error in proceeding as it did. Whatever the precise path the district court took to
granting summary judgment, we review that grant de novo, applying the same
legal standard employed by the district court. Simms v. Okla. ex rel Dep’t of
Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999).
Summary judgment is appropriate if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
III. Analysis
A. Ambiguity and Extrinsic Evidence
8 First American first complains that the district court erred in construing an
ambiguous contract as a matter of law. The district court’s reception of extrinsic
evidence, in First American’s estimation, confirms the court’s unchanged
assessment of the Operating Lease as ambiguous, violates the Oklahoma law of
contracts, and requires reversal. Although the district court’s admission of
extrinsic evidence may have been error, we do not agree that the district court
used the evidence to construe an ambiguous contract, or that any error in
admitting the evidence warrants reversal.
First American emphasizes that the district court “never recanted” its early
determination that the Operating Lease is ambiguous. Aplt. Br. at 19. But the
court’s September 2003 orders amply demonstrate that the district court did in
fact revise its earlier finding. First, the parties and the court were in apparent
agreement that the construction of the contract was a matter of law, an agreement
inconsistent with a continuing belief that the Operating Lease is ambiguous.
Second, while extrinsic evidence is often received to resolve contractual
ambiguities, the district court’s September 2003 orders explain that the evidence
was intended to provide context for the agreement, not to clarify any ambiguities.
In admitting extrinsic evidence the court was “not so much concerned about
whether or not any particular language in the agreement is ambiguous as it [was]
about the overall context in which the agreement was entered into and the
9 business purposes which animated the parties to the contract in entering into the
contract.” Order of Sept. 2, 2003 at 2. In its September 6 order, the district court
put the extrinsic evidence submitted to the use anticipated in the earlier order; the
court’s conclusion that the Operating Lease is a management contract is “based on
the language of the agreement,” and the extrinsic evidence shows that this
conclusion “is entirely consonant with the context in which the agreement was
negotiated and executed and the business purposes of the parties to the
agreement.” Order of Sept. 6, 2003 at 2. The admission of extrinsic evidence thus
did not signal an ongoing assessment of the contract as ambiguous.
But even if the district court did revise its earlier finding of ambiguity,
First American argues that the district court nevertheless erred in admitting
extrinsic evidence to construe an unambiguous contract. The district court’s
September 2 order distinguishes between the use of extrinsic evidence to clarify
an ambiguous contract and the use of extrinsic evidence to illuminate the context
in which an unambiguous contract was executed. There is considerable support
for the district court’s position, some of it from the Oklahoma courts and this
Court. See Amoco Production Co. v. Lindley, 609 P.2d 733, 741–42 (Okla. 1980)
(“The contract can be explained through the circumstances at the time of
contracting and subsequently taking into consideration the subject matter
thereof.”); Gibbs v. Trinity Universal Ins. Co., 330 P.2d 1035, 1037 (Okla. 1958)
10 (“In order to ascertain the intent [of the parties to a contract], it is sometimes
necessary, and always proper, to consider the situation of the parties and the legal
principles which they are presumed to know and have in mind.”); see also First
Nat. Bank in Dallas v. Rozelle, 493 F.2d 1196, 1200–01 (10th Cir. 1974) (“[T]he
surrounding circumstances and the relationship of the parties should be taken into
consideration. . . . [C]onstruing the contract in the light of the surrounding
circumstances known to the parties at the time of its execution does not violate
the parol evidence rule, even though the writing is not deemed ambiguous.”)
(internal citations omitted) (applying Oklahoma law); 11 Williston on Contracts §
32:7 (4th ed. 1999); 5 Corbin on Contracts § 24.7 (rev. ed. 1998); Restatement
(Second) Contracts § 212(1) & cmt. b (1981).
First American insists, however, that the current state of Oklahoma contract
law precludes the use of extrinsic evidence to interpret unambiguous contracts.
See Pitco Production Co. v. Chaparral Energy, Inc., 63 P.3d 541, 546 (Okla.
2003) (“To decide whether a contract is ambiguous we look to the language of the
entire agreement. . . . If a contract is complete in itself, and when viewed as a
totality, is unambiguous, its language is the only legitimate evidence of what the
parties intended. That intention cannot be divined from extrinsic evidence but
must be gathered from a four-corners’ examination of the instrument.”) (footnotes
omitted); Gamble, Simmons & Co. v. Kerr-McGee Corp., 175 F.3d 762, 767 (10th
11 Cir. 1999) (“If the contract is ambiguous . . . we may resort to extrinsic evidence .
. . to construe the agreement. However, if the contract is unambiguous its
language is the only legitimate evidence of what the parties intended . . . .”)
(internal citation omitted).
When sitting in diversity jurisdiction, this court applies the most recent
version of the law articulated by the state’s highest court. Vitkus v. Beatrice Co.,
127 F.3d 936, 941–42 (10th Cir. 1997). The current state of the Oklahoma law of
contracts appears to be that unambiguous contracts may be construed only in light
of the language contained within the contracts’ four corners. We need not resolve
this question of state law, however, because an error in the admission of evidence
is harmful only if the substantial rights of a party are affected. Fed. R. Civ. P. 61.
Because we agree with the district court’s ultimate determination that the contract
is unambiguously a management contract, the district court’s error in admitting
extrinsic evidence was harmless. Cf. U.S. v. 1,253.14 Acres, 455 F.2d 1177, 1180
(10th Cir. 1972) (holding that the admission of a letter written six months after
the contract was executed was “not prejudicial since the court's judgment is
sustained by evidence independent of the letter”).
B. Management Contracts
First American next argues that the district court erred in holding that the
Operating Lease is a management contract, and thus subject to NIGC approval.
12 The district court found the Operating Lease to be “much more than a vendor’s
agreement to provide gaming equipment.” Order of Sept. 6, 2003 at 2. In so
holding, the district court referred to the NIGC Deputy General Counsel’s opinion
letter and Multimedia’s March 20, 2002 brief, both of which singled out for
censure numerous provisions in the Operating Lease. According to the district
court, “[t]he provision of the totality of the expertise and services which the
[Operating Lease] obligates First American to provide would clearly amount to
management of at least ‘part of’ (indeed, major portions) of the gaming
operation.” Id.
The regulations promulgated under the IGRA define a management contract
as “any contract, subcontract, or collateral agreement between an Indian tribe and
a contractor . . . if such contract or agreement provides for the management of all
or part of a gaming operation.” 25 C.F.R. § 502.15. While neither the statute nor
the regulations define management, the regulations do define a primary
management official as any person “who has authority . . . [t]o set up working
policy for the gaming operation.” 25 C.F.R. § 502.19.
The Operating Lease affords First American considerable opportunity “to
set up working policy” for the Tribe’s gaming operation. The Operating Lease
obliges First American to develop employment procedures:
[First American] shall have the responsibility in the form of Technical Assistance to formulate procedures approved by the
13 Business Committee, which provide for employment, direction, control, and discharging of all personnel performing services in and on the properties in connection with the maintenance, operation, and management of the [gaming operation] . . . Said approval shall [be] accomplished within ten (10) working days and in the absence of action shall be deemed approved.
Operating Lease, Article 4(H)(3); 25 C.F.R. §531.1(b)(12). The Operating Lease
assigns the responsibility for formulating procedures for managing employees to
First American, not to the Tribe, and there is no provision in the Operating Lease
for the Tribe to formulate those procedures itself should it disapprove of First
American’s procedures. Moreover, the language of the article assumes that the
Tribe’s business committee will approve First American’s proposed rules, and it
provides for approval by default if the Tribe does not act quickly to register any
dissatisfaction with them.
Other provisions require First American to provide additional management
services. First American is obliged to provide “supervisors who supervise the
Skill Game Center Facilities in the compliance with the terms of this agreement.”
Art. 4(A). The Tribe is given thirty days to review and approve a plan of
operation of the facilities, a plan presumably prepared by First American. Id.
First American will provide personnel who will “supervise, train, and instruct”
the Tribe’s employees for the first three months after the opening of the
operation. Art. 4(H)(2); 25 C.F.R. §531.1(b)(4).
It is not only the definition of management extrapolated from the
14 regulations’ definition of primary management official that suggests the
Operating Lease is a management contract. The statute and regulations also list
responsibilities and benefits a contract must allocate between tribe and
management contractor if it is to be approved by the NIGC. These requirements
include limits on the term of a management contract and the percentage of a
gaming operation’s income the management contractor may receive as a fee,
provision for a guaranteed minimum monthly payment to the tribe, and the
assignment of a variety of functions to one party or the other. There is no
requirement that each of the enumerated functions be performed by the
management contractor, only that the “responsibilities of each of the parties for
each identifiable function” be enumerated. 25 C.F.R. § 531.1(b).
The Operating Lease contains a number of features the statute and
regulations require of management contracts. The Operating Lease provides that
First American will receive “as an Equipment Lease Fee” forty percent of
monthly net game revenues from the gaming operation. Art. 5(B)(1)(a). Forty
percent of net revenues is the maximum percentage permitted by the statute, 3 a
coincidence that suggests the Operating Lease was drafted with a view to
3 The statute sets the ceiling for the percentage fee at thirty percent in ordinary cases. 25 U.S.C. § 2711(c)(1); 25 C.F.R. §531.1(i)(1). It is only when the NIGC Chairman determines that the capital expenditure and income projections associated with a project justify a higher fee that forty percent may be charged.
15 compliance with this restriction. See 25 U.S.C. § 2711 (c)(2); 25 C.F.R.
§531.1(i)(2). That suggestion is reinforced by the fact that the length of the
Operating Lease is five years, the maximum term permitted by the statute. Art.
3(B); 25 U.S.C. § 2711(b)(5); 25 C.F.R. §531.1(h). 4 The Operating Lease also
satisfies the statute’s requirement that the Tribe be guaranteed a “minimum . . .
payment . . . that has preference over the retirement of development and
construction costs.” 25 U.S.C. § 2711(b)(3); 25 C.F.R. §531.1(f). The Operating
Lease guarantees the Tribe a monthly payment of $20,000 from First American,
which “takes precedence over the reimbursements of development and
construction costs advanced by [First American].” Art. 5(B)(1)(c). The
Operating Lease also sets a ceiling for the amount First American will spend on
development and improvements, and a corresponding limit on the amount it can
recover from the Tribe, as required by the statute. Art. 4(B); 25 U.S.C. §
2711(b)(4); 25 C.F.R. §531.1(g).
The district court’s determination that the Operating Lease is
unambiguously a management contract is supported by an NIGC Bulletin
discussing in general terms the distinction between management contracts and
4 The Operating Lease provides that the Tribe and First American may renegotiate the contract for two additional years, bringing the term of the contract to seven years, the maximum length permitted by the statute even with a showing that capital expenditure and income projections justify an increased term. Art. 3(B); 25 U.S.C. § 2711(b)(5); 25 C.F.R. 531.1(h).
16 consulting agreements and by an informal opinion letter authored by the NIGC
Deputy General Counsel identifying the Operating Lease as a management
contract. The informal pronouncements of an agency, which are not subject to
agency rule-making procedures, do not warrant Chevron deference. See S. Utah
Wilderness Alliance v. Dabney, 222 F.3d 819, 828 (10th Cir. 2000). Rather than
requiring our deference, such materials may be accepted by a court only as they
have power to persuade. Skidmore v. Swift, 323 U.S. 134, 140 (1944). While we
do not defer to the opinions expressed in the Opinion Letter and Bulletin 94-5, we
do observe that the NIGC’s apparent position coincides with our holding in this
case.
Bulletin 94-5 defines management broadly to include “planning, organizing,
directing, coordinating, and controlling . . . all or part of a gaming operation.”
NIGC Bulletin 94-5 at 2. The Bulletin singles out seven management activities as
especially probative of the question whether an agreement is a management
contract. Id. at 2–3. An agreement need not include all seven activities to be a
management contract; the “presence of all or part of these activities in a contract
with a tribe strongly suggests that the contract or agreement is a management
contract requiring [NIGC] approval.” Id. at 2. The Operating Lease contains five
of the seven provisions the Bulletin identifies as highly suggestive of a
management agreement: provision for accounting procedures, payment of a
17 minimum guaranteed amount to the tribe, construction financed by a non-tribal
party, a contract that establishes an ongoing relationship between a tribe and non-
tribal party, and compensation based on a percentage fee.
This conclusion is reinforced by the fact that the Operating Lease does not
much resemble a consulting agreement, which Bulletin 94-5 opposes to
management contracts. A contract that identifies a finite task, specifies a date for
its completion, and provides recompense based on an hourly or daily rate or fixed
fee “may very well be determined to be a consulting agreement” rather than a
management contract. Bulletin 94-5 at 3.
The opinion letter authored by the NIGC Deputy General Counsel also
identifies the Operating Lease as a management contract. The opinion letter
singles out provisions in the Operating Lease permitting First American to
develop procedures, supervise completion of construction and improvements, and
train and supervise employees for the first three months of operation. The
opinion letter also notes that a five year term is “typical” of management
contracts, and that reimbursement based on a percentage fee gives First American
a strong incentive to manage, so as to maximize its own return. Opinion Letter at
2–3. While the Bulletin and the opinion letter do not compel our deference, they
do offer confirmation of our conclusion that the Operating Lease is indeed a
management contract.
18 Despite the close correspondence between the Operating Lease and the
requirements of the regulations, First American insists that the Operating Lease is
not a management contract because neither party intended it to be a management
contract, because it was not performed as a management contract, and because it
confers no rights to manage, only opportunities to do so at the Tribe’s request. It
is questionable whether Oklahoma law permits the use of extrinsic evidence in
construing unambiguous contracts, and even if it did, the evidence as to the
parties’ intentions and the manner in which the contract was performed does little
to advance its position.
First American’s last argument, however, that a contract is only a
management contract if it confers rights rather than opportunities to manage,
would be significant if it accurately stated the law. But this argument is
problematic for several reasons, not least of which is the fact that neither the
statute nor the regulations contain a definition of manager or management that
would suggest that management is only management when the manager’s
decisions are not subject to tribal oversight. Nor does the ordinary definition of
management suggest that a manager is not a manager if an owner, board, or other
manager is capable of overriding particular management decisions. Bulletin 94-5
agrees that “[t]he exercise of [ultimate] decision-making authority by the tribal
council or the board of directors does not mean that an entity or individual
19 reporting to such a body is not ‘managing’ all or part of the operation.” Bulletin
First American cites a number of cases to support its argument, but none of
them is particularly supportive. Some of the cases cited contain no analysis of
what makes an agreement a management contract because the agreement involved
was acknowledged by the parties and the court to be a management contract. See
World Touch Gaming, Inc. v. Massena Mgmt., 117 F. Supp. 2d 271 (N.D.N.Y
2000); First Am. Casino Corp. v. E. Pequot Nation, 175 F. Supp. 2d 205 (D.
Conn. 2000); United States ex rel. Mosay v. Buffalo Bros. Mgmt., Inc., 1993 WL
643378 (W.D. Wisc. Aug. 17, 1993). Others contain no relevant analysis because
they identified the agreement as a consulting agreement. See Bounceback
Technologies.Com, Inc. v. Harrah’s Entm’t, Inc., 2003 WL 21432579 (D. Minn.
June 13, 2003); Calumet Gaming Group-Kansas, Inc. v. Kickapoo Tribe of
Kansas, 987 F. Supp. 1321 (D. Kan. 1998). One of First American’s cases
identifies as a de facto management contract three contracts that, read together,
effectively revoked a tribe’s managerial authority and vested it in a purported
consultant. See United States ex rel. Bernard v. Casino Magic Corp., 293 F.3d
419, 425–26 (8th Cir. 2001). But Casino Magic does not generalize its holding
beyond its facts, and it stops well short of holding that management contracts are
only those agreements that strip a tribe of decision-making authority entirely.
20 First American does not argue that the functions the Operating Lease oblige
it to perform are not management functions. Rather, First American contends that
it is only when those functions are performed as a matter of right that a contract
granting such rights is a management contract. Neither the statute nor the
regulations imply such a limitation. Indeed, the regulations’ definition of a
management contract as an agreement that provides for the management of “all or
part” of a gaming operation suggests a definition of management that is partial
rather than absolute, contingent rather than comprehensive. The Operating Lease
allowed First American to set up the working policy of the Tribe’s gaming
operation, and many of its features bear more than a passing resemblance to the
minimum requirements of a management contract. The district court correctly
determined that the Operating Lease is unambiguously a management contract.
C. Tortious Interference with Contract
First American next complains that even if the district court correctly
determined the Operating Lease to be a management contract, it erred in holding
that the Lease could not serve as the basis of a claim for tortious interference with
contract. The district court held that “[t]he agreement was not approved by the
NIGC, as is required for management contracts. It is, for that reason, void. . . .
[T]his determination leaves the plaintiff with a claim based on the existence of a
‘business relationship’ . . . .” Order of Sept. 6, 2003 at 3. Implicit in this ruling
21 is the conclusion that a void contract may not form the basis of a claim for
tortious interference with contract.
The regulations announce in clear terms the consequences of failing to
obtain NIGC approval for a management contract: “Management contracts . . .
that have not been approved by the Secretary of the Interior or the Chairman in
accordance with the requirements of this part, are void.” 25 C.F.R. § 533.7.
First American concedes that the regulation designates unapproved management
contracts as void, but urges us to interpret the term “void” as meaning
“unenforceable,” claiming this interpretation is necessary “to avoid illogical,
unreasonable or inconsistent results.” Aplt. Br. at 33–34. After all, First
American reasons, all management contracts are unapproved management
contracts until they are approved by the Chairman of the NIGC. If those
unapproved contracts are truly void because unapproved, then there will never be
anything for the NIGC to approve. The “illogical, unreasonable, or inconsistent”
result that flows from reading the regulation to mean what it says is that if the
Operating Lease “were truly ‘void’ then it would not be capable of becoming
enforceable through the approval of the NIGC.” Aplt. Br. at 37. This is not
convincing. A contract is an agreement to which the law attaches a duty to
perform and penalties for nonperformance. See Black’s Law Dictionary 318 (7th
ed. 1999). Certain formalities, which can vary with the circumstances, must take
22 place before an agreement becomes a contract. The regulations’ requirement that
management contracts be approved to be valid creates no ontological mystery
whereby a contract springs fully-fashioned from nothingness, but rather identifies
a formality necessary before an agreement to manage a tribal gaming operation
can become a contract so to manage. Lacking the formality of NIGC approval, an
agreement to manage does not become a contract: it is void. See Casino Magic,
293 F.3d at 421 (“For a management contract involving Indian land to become a
binding legal document, it must be approved by the . . . [NIGC].”).
Apart from the argument that a literal reading of the statute leaves nothing
for the NIGC to approve, First American has failed even to argue that the plain
language of the regulation leads to the “illogical, inconsistent or unreasonable”
results of which it complains. Absent some evidence or argument that the
language of the regulation undermines the statute under which it was
promulgated, we must decline to adopt a construction of the regulation so at odds
with its language.
Even if we were to hold that an unapproved management contract is merely
unenforceable, rather than void, it would not follow that First American has a
claim for tortious interference. Oklahoma law requires an enforceable contract as
a predicate to a suit for tortious interference with contract: “The right to recover
for the unlawful interference with the performance of a contract presupposes the
23 existence of a valid enforceable contract.” Ellison v. An-Son Corp., 751 P.2d
1102, 1106 (Okla. Ct. App. 1987) (quoting Bailey v. Banister, 200 F.2d 683, 685
(10th Cir. 1952)). First American attempts to distinguish Ellison and Bailey by
arguing that the Operating Lease “was still subject to NIGC approval and could
still have become both valid and enforceable if that approval was conferred.”
This distinction is not a distinction at all, but rather a description of the situation
of the plaintiffs in both Ellison and Bailey. The plaintiff in Ellison had been the
high bidder for an oil and gas lease at a public auction but “did not have a lease
which had been accepted by the Bureau of Indian Affairs.” 751 P.2d at 1106. In
Bailey, the Assistant Area Director of Indian Affairs had accepted the purchase
price of land from the plaintiff, but the sale had not yet been authorized by the
Area Director or Secretary of the Interior. 200 F.2d at 684–85. At the point at
which the defendants in Ellison and Bailey intervened, the plaintiffs had
agreements with the potential to become contracts, but, lacking requisite
approvals, they did not have contracts. And under these circumstances the
Oklahoma Court of Civil Appeals and this Court found that the plaintiffs could
not maintain actions for tortious interference with contractual relations.
First American invokes Prosser and Keeton in support of the proposition
that contracts voidable due to “conditions precedent to the existence of the
obligation, can still afford a basis for a tort action when the defendant interferes
24 with their performance.” W. Page Keeton et al., Prosser and Keeton on Torts §
129 at 995 (5th ed. 1984) (footnote omitted). Agreements which violate public
policy, however, do not fall within this rule. In order to form the basis of a claim
for tortious interference with contract, a contract must not be “opposed to public
policy, so that the law will not aid in upholding it.” Id. at 994 (footnote omitted);
see also Restatement (Second) of Torts § 774 (“One who by appropriate means
causes the nonperformance of an illegal agreement or an agreement having a
purpose or effect in violation of an established public policy is not liable for
pecuniary harm resulting from the nonperformance.”). Congress has determined
that requiring NIGC approval of management contracts will advance its efforts to
protect tribes from unsuitable influences and to ensure that tribes are the primary
beneficiaries of Indian gaming operations. See 25 U.S.C. §§ 2702, 2711.
Oklahoma law, the law of this Circuit, and even the authorities on which First
American relies, all support the position that an unapproved management contract
may not form the basis of a suit for tortious interference with contract. Such
perfect agreement is sufficiently rare that we are loath to disturb it.
D. Severability
Finally, First American argues that the district court erred in failing to give
25 effect to the severability clause in the Operating Lease, so that the “otherwise
valid construction loan and equipment lease” could still form the basis of a suit
for tortious interference with contract. 5 Aplt. Br. at 44. The Operating Lease
provides that “each and every portion of this Agreement is severable and the
invalidity of one or more such provisions shall not in any way effect [sic] the
validity of this Agreement or any other provision of this Agreement.” Art. 16.
First American argues that since the parties’ intentions determine if a contract is
severable or entire under Oklahoma law, the existence of the severability clause
in the Operating Lease should be given “considerable weight.” Aplt. Rep. Br. at
22 (quoting 15 Williston on Contracts § 45.5 (4th ed. 2000)). We agree that
contracting parties’ intentions determine whether a contract is divisible or entire
under Oklahoma contract law. Greater Oklahoma City Amusements, Inc. v.
5 It may be questioned whether any part of a contract determined to be void ab initio, including the severability provisions, may be enforced. Apart from a single footnote in Multimedia’s Brief referring us to one case decided before passage of the IGRA and another recently vacated by the Sixth Circuit Court of Appeals, we have not had the benefit of the parties’ argument on this issue. As our discussion in text makes evident, First American’s claim fails even if the ordinary severability principles of Oklahoma contract law apply. We therefore decline to address this question. See Griffin v. Davies, 929 F.2d 550, 554 (10th Cir. 1991) (citation omitted).
26 Moyer, 477 P.2d 73, 75 (Okla. 1970). A contract is entire if its provisions are
interdependent, so that “all of the things, as a whole, are of the essence of the
contract [so that] it appeared that the purpose was to take the whole or none.” Id.
(citation omitted).
First American characterizes the Operating Lease as an equipment lease and
a construction loan from which any invalid management provisions can easily be
excised. We find, however, that the Operating Lease may not be neatly
anatomized into valid and invalid portions. Several of the management features
we identified above permit First American to exert considerable and continuing
influence over the day-to-day running of the Tribe’s gaming operation. The
Operating Lease permitted First American to develop employment policy, Art.
4(H)(3), to supervise employees for the first three months, Art. 4(H)(2), to create
a plan of operation, Art. 4(A), to establish a start-up budget, Art. 4(C), and to
formulate an operating budget, Art. 4(D). First American did not bargain merely
for the right to repayment of construction costs and equipment lease fees, but for
a right to repayment from the proceeds of an operation the Operating Lease had
allowed it to structure. First American’s management of the casino cannot be
27 erased simply by dividing the Operating Lease at this date into construction loan,
equipment lease, and incidental management provisions, and it is far from certain
that First American would have agreed to such a substantial investment without
the ability to formulate policies ensuring the operation’s profitability.
First American’s glib division of the contract into loan and lease also omits
discussion of the Tribe’s incentives to enter into the Operating Lease. First
American, “having held itself out to the Tribe as experienced in the field of
development and managing various business enterprises,” guaranteed the Tribe a
monthly payment of $20,000 that took precedence over the repayment of the
construction loan. Art. 5(B)(1)(c). First American “specifically agree[d] that
[this guaranteed payment] is a material and substantial term and condition of this
Agreement.” Id. First American’s tidily bifurcated version of the Operating
Lease makes no mention of this material and substantial term. A management
contract must include provision for such a payment, 25 U.S.C. § 2711(b)(3); 25
C.F.R. 531.1(f), and it seems most unlikely that the Tribe would have entered into
an agreement permitting First American to assume management functions without
also guaranteeing a minimum return to the Tribe. A contract is entire when its
28 various provisions are a “package deal.” Moyer, 477 P.2d at 75. First
American’s proposed severed version of the contract does not account for a
provision that was almost certainly part of the package for which the Tribe
bargained, and is therefore unconvincing.
III. Conclusion
Non-tribal parties who enter into contracts relating to tribal gaming
undertake, in addition to ordinary business risks, certain regulatory risks as well.
First American elected to execute a de facto management contract without the
fuss and bother of NIGC approval and now wishes Multimedia to assume the
costs of First American’s decision. We conclude that under Oklahoma law an
unapproved management contract, being void, cannot be the basis for a suit
against a third party for tortious interference.
The decision of the district court is AFFIRMED.