City of Duluth v. Fond du Lac Band of Lake Superior Chippewa

830 F. Supp. 2d 712, 2011 WL 5854639, 2011 U.S. Dist. LEXIS 134009
CourtDistrict Court, D. Minnesota
DecidedNovember 21, 2011
DocketCivil No. 09-2668 (SRN/LIB)
StatusPublished
Cited by4 cases

This text of 830 F. Supp. 2d 712 (City of Duluth v. Fond du Lac Band of Lake Superior Chippewa) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F. Supp. 2d 712, 2011 WL 5854639, 2011 U.S. Dist. LEXIS 134009 (mnd 2011).

Opinion

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

This matter is before the court on Defendant’s motion for relief under Rule 60(b) from several orders of this Court (Doc. No. 207). For the reasons stated below, this Court grants the motion in part and denies the motion in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1986, the City of Duluth and the Fond du Lac Band of Lake Superior Chippewa entered into a joint venture to operate a gaming facility on tribal trust land located within the City, under which the City would derive a substantial portion of the casino’s revenues.1 In 1988, Congress [715]*715enacted the Indian Gaming Regulatory Act (“IGRA”), which requires that Indian tribes have “sole proprietary interest” in, and responsibility for, Indian “gaming activity.” 25 U.S.C. § 2710(b), (d). The Act expressly applies to pre-existing operations.

In 1989, the Band filed a declaratory judgment action against the City in an attempt to convince the City to renegotiate a new agreement in light of the IGRA. The parties ultimately settled their dispute. In 1994, the Court (J. Magnuson) entered a Consent Order incorporating a group of settlement agreements between the City and the Band (the “1994 Agreements”). (Doc. No. 11-7.) The Order and 1994 Agreements were premised on the approval by the National Indian Gaming Commission (“NIGC”) of the Agreements as being in compliance with the IGRA. The NIGC promptly approved the agreements.

Under the 1994 Agreements and Order, the City and the Band reorganized their relationship to eliminate the joint venture, but the City nevertheless retained certain rights regarding various aspects of operating the casino. The parties agreed on an “Initial Term” of seventeen years (from 1994 through March 31, 2011), with an “Extension Term” of twenty-five years (from April 1, 2011 to 2036). Most importantly, for present purposes, the Band was obligated during the Initial Term to pay to the City, on a quarterly basis, nineteen percent of the casino’s gross revenues as “rent” (“Rent Item No. 2”). They also agreed in 1994 to determine the rate of rent for the Extension Term when the beginning of that term approached and further agreed on a procedure, culminating in binding arbitration, for resolving any inability of the parties themselves to agree on the new rate.

Between 1994 and 2009, the Band operated the casino and paid the City the rent owed under the 1994 Agreements. In January 2009, however,

the Band informed the City that its auditors had advised the Band that the ... Casino had been incorrectly treating certain promotional expenditures as operating expenses rather than as “contra-revenues,” i.e., offsets against revenue. As a result, the Band declared, the ... Casino’s gross revenue since the execution of the sublease through the third quarter of 2008 was lower than originally calculated, and, consequently, the calculation of the quarterly payments due to the City also should have been lower. The Band concluded that the City had been overpaid by $561,047.59 and stated that it intended to apply this amount as an offset against future payments to the City.

City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 708 F.Supp.2d 890, 896 (D.Minn.2010). In August 2009, the Band then informed the City that, pursuant to a tribal resolution, it was ceasing all payments to the City because the parties’ arrangement did not comply with governing law. Id. The City declared the Band in default for breaching the 1994 Agreements. Id.

In September 2009, after the Band did not respond to the City’s request that it cure its breach, the City commenced this action to enforce the 1994 Agreements. (Doc. No. 1.) In addition to asserting claims for breach of contract, it also sought declaratory and injunctive relief. (Id.) The Band’s Answer included the following counterclaims: a claim for declaratory relief that “certain terms” of the 1994 Agreements are invalid, and three claims of un[716]*716just enrichment (based, respectively, on unconscionability, mutual mistake, and illegality), each alleging that it would be inequitable for the City to retain any portion of the more than $75,527,708 in rent that the Band had paid since 1994 that is in excess of “any amounts not directly tied to goods or services the City provided to the Band” during that period. (Doc. No. 3.)

In December 2009, the City moved for summary judgment, contending that there were no genuine issues of fact that the Band breached its obligations under the 1994 Agreements by (1) unilaterally deducting the $561,047 in purported “contra-revenues” from what it otherwise would have owed the City, (2) announcing it would continue to make such deductions, and (3) adopting a resolution declaring that the Band would cease all payments to the City. City of Duluth, 708 F.Supp.2d at 895. In April 2010, the Court (I. Montgomery) ruled that the 1994 Agreements— as incorporated in the Consent Order— constituted res judicata, such that they could be modified, if at all, only pursuant to a Rule 60(b) motion, which the Band had not (yet) filed. Id. at 896-97. The Court also concluded that—as of the time of the City’s motion—“the Band has failed to demonstrate a cognizable change in the law [as] required under Rule 60(b) and [the Supreme Court’s decision in] Rufo.” Id. at 900. The Court further ruled that fact issues precluded summary judgment on the propriety of the Band having withheld “contrarevenues.” Id. at 902. Finally, the Court rejected the City’s argument that it was entitled as a matter of law to the alternative remedy of accelerated damages for the Band’s failure to make its payments for the Extension Term beginning April 1, 2011. Id. at 903.

The Band then sought review of the 1994 Agreements by the NIGC. The NIGC granted review. By Order dated May 13, 2011, 2011 WL 1832786, the Court denied the Band’s request for a continuance pending the completion of the NIGC’s review, and ordered the parties to submit to binding arbitration the issue of the amount of rent for the twenty-five year Extension Term of the Agreements. (Doc. No. 179 (adopting Report and Recommendation, Doc. No. 178).) A trial was scheduled to commence on July 26, 2011.

Shortly after those arbitration proceedings commenced, the NIGC, on July 12, 2011, issued a Notice of Violation (“NOV”), concluding that the 1994 Agreements violated the IGRA’s mandate that the Band retain “sole proprietary interest” in and “responsibility for” its gaming activity. The NIGC thus ordered the Band to cease performance under the 1994 Agreements or face sanctions, including fines and the possible closure of the casino.

The Band promptly informed this Court of the NOV as well as of its intent to therefore move for relief from the consent decree. (Doc. No. 202.) On July 22, 2011, the Band filed the present motion under Rule 60(b). (Doc. No. 207.) This Court removed the matter from its trial calendar and promptly heard oral argument on the Band’s motion.

II. DISCUSSION

Pursuant to Rule 60(b), the Band seeks a broad array of relief from three separate Orders as follows:

(1) The 1994 Consent Order:

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Bluebook (online)
830 F. Supp. 2d 712, 2011 WL 5854639, 2011 U.S. Dist. LEXIS 134009, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-duluth-v-fond-du-lac-band-of-lake-superior-chippewa-mnd-2011.