Nenana Fuel Co. v. Native Village of Venetie

834 P.2d 1229, 1992 Alas. LEXIS 94, 1992 WL 172560

• Court: Alaska Supreme Court
• Decided: July 24, 1992
• Docket: S-3709, S-3721 and S-4299
• Status: Published

Opinions

OPINION

PER CURIAM.

I. INTRODUCTION

This appeal comes after the superior court set aside a default judgment against the Native Village of Venetie Tribal Government (Tribal Government) and the Native Village of Venetie (Village Corporation). The court determined that the Tribal Government was a sovereign entity and therefore entitled to sovereign immunity. The court found that the Village Corporation was also a sovereign entity, but that it had waived its immunity when it adopted a “sue and be sued” clause in its corporate charter. Judge Greene stayed Nenana Fuel’s action against the Village Corporation, ordering that it exhaust its tribal court remedies before proceeding in state court.

Nenana Fuel appealed the court’s finding that the Tribal Government and the Village Corporation were entitled to sovereign immunity. Nenana Fuel argued in the alternative that the Tribal Government waived its sovereign immunity when it agreed to the remedies on default clause contained in a note and security agreement signed by the parties. Moreover, Nenana Fuel contended that this waiver pertained to Vene-tie’s tribal courts, and that the order to exhaust tribal remedies was therefore improper. The Tribal Government and the Village Corporation cross-appealed the superior court’s ruling that the “sue and be sued” clause of the Village Corporation’s corporate charter was sufficient to waive its sovereign immunity.

Nenana Fuel subsequently obtained a stay of appeal, claiming that it had discovered new evidence which indicated that the Tribal Government and the Village Corporation had misrepresented their history to the court, and that they were not sovereign entities. This evidence consisted of documents and other evidence attached to the State of Alaska’s Motion for Summary Judgment in an unrelated federal case, State of Alaska ex rel. Yukon Flats School Dist. v. Native Village of Venetie, No. F87-051 CIV (D. Alaska, motion filed July 6, 1990). Based on this new evidence, Nenana Fuel filed a motion for relief from the superior court’s earlier decision. The trial court denied that motion.

Nenana Fuel appeals that decision. Its appeal has been consolidated with the other issues pending in this litigation. We reverse.

II. FACTS AND PROCEEDINGS

A. Facts

Nenana Fuel sold fuel to the Tribal Government and Village Corporation in September 1984, when Venetie was expanding the airstrip at Arctic Village. The fuel was used to power equipment used on the site. The Tribal Government and the Village Corporation executed a Promissory Note and Security Agreement for the payment due Nenana Fuel for the fuel. The Tribal Government and the Village Corporation failed to pay Nenana Fuel as agreed in the promissory note. After unsuccessfully attempting to obtain possession of the collateral provided for in the Security Agreement, Nenana Fuel sought relief in the superior court.

At trial, both Nenana Fuel and the superior court accepted the representations made by the Tribal Government and the Village Corporation as to their history. The following history was therefore unquestioned. In 1940, the Secretary of the Interior approved the Village’s constitution pursuant to § 16 of the Indian Reorganization Act (IRA), 25 U.S.C. § 461 et seq. (1982), 48 Stat. 988 (1934), and the Tribal Government has functioned since that time under this federal authority. In 1940, the Village also incorporated under § 17 of the IRA, which empowers it through its charter, constitution and bylaws to transact business for the village.

In 1943, at the request of the people from the Native Villages of Venetie, Arctic Village, Christian Village and Robert’s Fish Camp, the Secretary of the Interior withdrew the 1.4 million acre Venetie reservation for the use and occupancy of the Natives of those villages, pursuant to the authority vested in him by 48 U.S.C. § 358(a) (repealed 1976). Congress revoked this reservation in 1971 by enacting § 19(a) of the Alaska Native Claims Settlement Act (ANCSA). See 43 U.S.C. § 1618 (1988).

Rather than participate in the regional corporation scheme established by ANCSA, the Natives of Venetie and Arctic Village elected to take fee title to their reservation lands pursuant to § 19(b) of ANCSA, 43 U.S.C. § 1618(b) (1988). Upon the federal government’s conveyance of these lands in December 1979, the ANCSA village corporation deeded the lands to the Tribal Government. The Tribal Government has owned the former reservation lands in fee since that time.

B. Procedural Background

In February 1987, Nenana Fuel filed a complaint in superior court alleging that the Village Corporation and Tribal Government owed it $134,128.17 plus interest and costs under the promissory note and security agreement signed by the parties. In June 1987, the superior court entered a default judgment against both defendants.

When the judgment was not satisfied, the superior court ordered a judgment debtor examination of both the Tribal Government and the Village Corporation. Neither defendant appeared for the examination. Pursuant to Nenana Fuel’s motion, the court then entered an order to show cause why the Tribal Government and the Village Corporation should not be held in contempt for failing to appear at the judgment debtor examination.

The Tribal Government and the Village Corporation filed a memorandum in opposition to Nenana Fuel’s motion for an order to show cause, arguing that the superior court lacked subject-matter jurisdiction over the controversy due to tribal sovereign immunity. Nenana Fuel replied that the Tribal Government and the Village Corporation had waived any sovereign immunity by failing to raise that defense during the pendency of the underlying suit, and that the Village Corporation had also waived any sovereign immunity by including a “sue and be sued” clause in its corporate charter.

The Tribal Government and the Village Corporation then moved to set aside the default judgment against them. They also moved to dismiss Nenana Fuel’s complaint, claiming sovereign immunity and insufficiency of process. In April 1988, the trial court ruled that the defendants were entitled to sovereign immunity. It then dismissed the complaint as to the Tribal Government. However, the court found that the “sue and be sued” clause of the Village Corporation’s charter was sufficient to waive the Village Corporation’s sovereign immunity. The court ruled that the effect and extent of that waiver would be determined after further briefing and argument by the parties.

Nenana Fuel argued that the Village Corporation’s waiver was a general one, and that suit in state superior court was therefore proper. The Village Corporation contended that the “sue and be sued” clause must be interpreted by the Tribal Government. If it did constitute a waiver, the clause would permit suit only in its own tribal courts.

After this court’s May 1988 decision in Native Village of Stevens v. Alaska Management & Planning, 757 P.2d 32 (Alaska 1988), the superior court reinstated the Tribal Government as a party to the action and again heard argument as to whether the Tribal Government was a sovereign entity. In its supplemental brief on this question, the Tribal Government claimed that, because it had a constitution adopted pursuant to the IRA and a reservation prior to the enactment of ANCSA, it was a self-governing tribe entitled to sovereign immunity.

In March 1989, the superior court ruled that, even after Stevens Village, the Tribal Government was a sovereign entitled to immunity from suit. Because the court found that the Tribal Government had not waived its immunity, it again dismissed the case as to the Tribal Government. The court reaffirmed its earlier ruling that the “sue and be sued” clause of the Village Corporation’s charter acted as a waiver of the Corporation’s sovereign immunity.

In November 1989, the superior court set aside the default judgments against both the Village Corporation and the Tribal Government. The court dismissed the action against the Tribal Government, on the basis of its ruling that the Tribal Government possessed sovereign immunity. After asserting that it had subject-matter jurisdiction over the lawsuit, and that it therefore had the authority to resolve the issues of sovereign immunity and the nature and effect of the “sue and be sued” clause in the Village Corporation charter, the court then stayed the action against the Village Corporation with the order that Nenana Fuel exhaust its tribal court remedies.

Nenana Fuel appealed this decision. The Tribal Government and the Village Corporation cross-appealed the superior court’s assertion of jurisdiction and determination that the Village Corporation waived its sovereign immunity.

During the course of this appeal, Nenana Fuel learned of documents filed by the State of Alaska in a federal district court case, State of Alaska ex rel. Yukon Flats School Dist. v. Native Village of Venetie, No. F87-051 CIV (D. Alaska, motion filed July 6, 1990), which contradict some representations made by Venetie concerning its history. Because the superior court’s earlier decision was based in part on the Tribal Government’s claim that it is an IRA organization and that its constitution and bylaws were approved by the Secretary of the Interior in 1940, Nenana Fuel requested relief from the court’s ruling under Civil Rule 60(b). The superior court denied that motion.

III. DISCUSSION

A. The Remedies on Default Clause Constitutes an Express Waiver of Venetie’s Sovereign Immunity

Nenana Fuel argues that the Remedies on Default clause contained in the note and security agreement effected a waiver of any sovereign immunity possessed by the Tribal Government and the Village Corporation (collectively referred to as Vene-tie). That clause provides:

On the occurrence of a default and after any notice required ... and in addition to any remedies described in the Note, [Ne-nana Fuel] ... may:

(a) bring an action upon the Note;

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(d) dispose of the collateral in any commercially reasonable manner and, in the event of a deficiency, bring an action against Debtors for that deficiency;

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(f) invoke any other remedy provided by law or this agreement; and

(g) invoke any combination of these remedies allowable under Alaska law.

Venetie argues that this clause contains no express waiver of its immunity, and that a waiver of sovereign immunity cannot be implied.¹ See Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 1676, 56 L.Ed.2d 106 (1978) (a waiver of sovereign immunity cannot be implied but must be unequivocally expressed).

In Native Village of Eyak v. GC Contractors, 658 P.2d 756 (Alaska 1983), we held that a tribe waives its sovereign immunity by agreeing to contract terms inconsistent with sovereign immunity. Eyak had entered into a contract with GC Contractors under which GC Contractors was to build a community center for Eyak. Pursuant to an arbitration clause in the contract, the parties submitted to arbitration a dispute concerning Eyak’s failure to pay money due under the contract. The arbitrator awarded GC Contractors the full sum sought, and rejected Eyak’s argument that it would not be bound by any arbitration decision on the grounds of sovereign immunity. Adhering to the general rule that all provisions in a contract should be found meaningful, we affirmed the superi- or court’s confirmation of the arbitration award. Id. at 760.

The United States Court of Appeals for the Ninth Circuit reached the opposite result in Pan American Co. v. Sycuan Band of Mission Indians, 884 F.2d 416, 418-20 (9th Cir.1989), holding that an arbitration clause in a management agreement between an Indian tribe and the non-Indian operator of the tribe’s bingo enterprise did not constitute a waiver of the tribe’s sovereign immunity. We distinguished Pan American from Eyak in Hydaburg Coop. Ass’n v. Hydaburg Fisheries, 826 P.2d 751 (Alaska 1992), however, noting that Pan American involved a challenge to the tribe’s authority to regulate affairs on its reservation, and did not involve a suit to compel arbitration or enforce an arbitration award. Id. at 754-55. We stated: “Arguably, even under Pan American an agreement to arbitrate disputes arising out of a contract constitutes a tribe’s consent to suit for the limited purposes of compelling arbitration or enforcing an arbitration award.” Id. at 754. We also noted that “[tjhis principle is well established in situations involving foreign sovereigns.” Id. (citing Restatement (Third) of the Foreign Relations Law of the United States § 456(2)(b) (1987)).

In the present case, the language of the Remedies on Default clause in the parties’ security agreement clearly expresses a waiver of immunity. In the event of default, it authorizes Nenana Fuel to “bring an action upon the Note” or to invoke any other remedy “allowable under Alaska law.” As we stated in Eyak, all provisions in a contract should be found meaningful to the extent possible. 658 P.2d at 760. We therefore must read the Remedies on Default clause as expressly waiving any sovereign immunity which Venetie might possess, and referring actions based upon the contract to Alaska courts for application of Alaska law. Accordingly, we find that neither the Tribal Government nor the Village Corporation is entitled to sovereign immunity in this case.

Because we find that the Remedies on. Default clause constitutes an express waiver of any sovereign immunity possessed by Venetie, we do not consider whether the Tribal Government and Village Corporation actually constitute sovereign bodies. For the same reason, we need not examine the nature and effect of the “sue and be sued” clause in the Village Corporation’s charter.

B. The Superior Court Erred In Requiring Exhaustion Of Tribal Court Remedies

The superior court ruled that it had jurisdiction over this case because the Village Corporation had waived its sovereign immunity. However, the court stayed the action against the Village Corporation and ordered that Nenana Fuel exhaust its tribal court remedies. In making this holding, the court invoked the doctrine of comity enunciated in National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985), and refined in Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. 9, 107 S.Ct. 971, 94 L.Ed.2d 10 (1987).

However, the consent to suit in the Remedies on Default clause was in no sense limited to the tribal court. Venetie agreed that Nenana Fuel could “bring an action upon the note” without restricting jurisdiction to any particular forum. Reference to Alaska law in part (g) of the clause makes it clear that an action in Alaska’s courts was within the contemplation of the parties. Therefore we find that the superior court erred in ordering Nenana Fuel to exhaust its remedies in tribal court. Furthermore, we note that the superior court’s order was erroneous because there has been no showing that Venetie has a functioning tribal court, and because there has been no showing of what the jurisdiction of such an entity might be.²

REVERSED and REMANDED for proceedings in accordance with this opinion.

MOORE, J., concurs.

RABINO WITZ, C.J., dissents.

1 . Venetie also contends that, even if the contract contains an express waiver, the three Tribal Government Council members who signed the document had no authority to waive the Tribal Government's immunity without obtaining a resolution of the entire Tribal Government. While this may be true, Venetie waived this argument by failing to raise it before the superi- or court.

2 . Because the trial court did not base its decision on the Remedies on Default clause, it did not consider the relationship between that clause and the doctrine of exhaustion of remedies. We believe that comity principles are inapplicable when a party brings a legal action in state court pursuant to a contractual provision permitting the invocation of remedies under state law.