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Amerind Risk Management Corp. v. Blackfeet Housing

United States District Court, D. New Mexico

December 29, 2016

AMERIND RISK MANAGEMENT CORPORATION, a federally chartered Section 17 Tribal Corporation, Plaintiff,
v.
BLACKFEET HOUSING, Defendant.

          MEMORANDUM OPINION AND ORDER

         Plaintiff Amerind Risk Management Corporation (Plaintiff) seeks declaratory and injunctive relief from litigation brought by Defendant Blackfeet Housing (Defendant) in the Blackfeet Tribal Courts. See COMPLAINT (Doc. No. 1). Defendant has moved to dismiss the Complaint, arguing that issue preclusion bars Plaintiff from establishing subject matter jurisdiction, that the Court lacks personal jurisdiction over Defendant, and that Plaintiff has failed to exhaust tribal remedies. See MOTION TO DISMISS (Doc. No. 11) (Motion); MEMORANDUM IN SUPPORT OF MOTION TO DISMISS (Doc. No. 12) (Memorandum); DEFENDANT'S REPLY BRIEF IN SUPPORT OF ITS MOTION TO DISMISS (Doc. No. 19) (Reply). Plaintiff opposes the Motion. See RESPONSE IN OPPOSITION TO MOTION TO DISMISS (Doc. 17) (Response). The Court will deny the Motion.

         I. BACKGROUND

         Plaintiff is a federally-chartered tribal corporation formed under Section 17 of the Indian Reorganization Act, 25 U.S.C. § 477. See Compl. ¶ 11. The charter tribes are the Red Lake Band of Chippewa Indians, the Confederated Salish and Kootenai Tribes of the Flathead Reservation, and the Pueblo of Santa Ana. See Compl. ¶ 11. Plaintiff was formed to provide risk-sharing self-insurance for tribal governments and entities in response to a lack of affordable insurance options on Indian lands. See Compl. ¶ 12. Plaintiff has over 400 tribal member entities that contribute capital to a risk pool for each line of coverage, from which Plaintiff pays all covered claims. See Compl. ¶ 13. Members' participation in the risk-sharing group is governed by contractual agreement. See Compl. ¶ 13.

         Defendant is a member entity that entered into a Participation Agreement (PA) in March 2012 to join Plaintiff's Tribal Operations Protection Plan (TOPP). See Compl. ¶ 16. The PA provides that participants in TOPP “agree to jointly share in the costs of protecting against financial loss and in the monetary claims that may arise from financial loss.” Compl. ¶ 17. They are “responsible for annual contributions consisting of a proportional share of expected loss costs of TOPP as well as a proportional share of operational costs of TOPP.” Compl. ¶ 17 (internal brackets and quotation marks omitted). In return, the PA guarantees that members are indemnified “in accordance with any coverage documents issued to the Participant and this agreement, but only from the assets of TOPP.” Compl. ¶ 18.

         The PA contains agreed-upon procedures for the resolution of any disputes between Plaintiff and participants that arise out of or are related to the PA, including denials of indemnification. See Compl. ¶¶ 19-20. Disagreements must first be addressed through informal mediation, which, if not successful within 90 days, is to be followed by binding arbitration according to a specified process. See Compl. ¶ 20. The PA provides that the “arbitrator's award is final and may be entered and enforced in one of three Courts of Competent Jurisdiction: this Court, the Second Judicial District Court of the State of New Mexico, or the Pueblo of Santa Ana Tribal Court.” Compl. ¶ 21. The PA allows “either party [to] bring an action in one of the Courts of Competent Jurisdiction to: (i) compel arbitration, (ii) determine the validity of [the PA], (iii) determine the authority of the signatories to [the PA], or (iv) determine whether tribal sovereign immunity or tribal remedies has been waived.” Compl. ¶ 22. The PA also specifies that participants in TOPP agree to waive the exhaustion of tribal remedies to the extent permitted by law. See Compl. ¶ 22.

         As a participant in TOPP governed by the March 2012 PA, Defendant obtained four insurance policies from Plaintiff. See Compl. ¶ 23. Defendant contacted Plaintiff in April 2013 regarding “snow entering through vents and ‘crawl space' issues” with some of Defendant's dwellings. Compl. ¶ 25. Defendant then made formal claims under its policies for 130 dwellings in August 2013. See Compl. ¶ 26. These claims were related to the presence of mold in the dwellings, which is specifically excluded from coverage under TOPP. See Compl. ¶ 26.

         In February 2014, while Plaintiff was still evaluating the claims, Defendant sent Plaintiff a demand for over 1.4 million dollars. See Compl. ¶ 26. Plaintiff denied the claims in March 2014 “for the specific exclusion of mold, for construction defects, for failure to maintain the dwellings properly, and for failure to report damage on a timely basis.” Compl. ¶ 27. In April 2014, rather than invoking the dispute resolution procedures contained in the PA, Defendant filed suit against Plaintiff in the Blackfeet Tribal Court. See Compl. ¶ 28; Blackfeet Hous. v. Amerind Risk Mgmt. Corp., Case No. 2014 CA-60 (filed April 18, 2014).

         Plaintiff made a special appearance in the Blackfeet Tribal Court and moved to dismiss the suit for lack of jurisdiction, asserting sovereign immunity and relying on the promises in the PA. See Compl. ¶ 30. In December 2014, while the motion to dismiss was pending in the tribal court, Plaintiff filed for arbitration before the American Arbitration Association. See Compl. ¶¶ 30, 32. Plaintiff then filed suit in this Court to compel arbitration. See Compl. ¶ 32; Amerind Risk Mgmt. Corp. v. Blackfeet Hous., No. 15-cv-00072 WJ/KBM (D.N.M. filed January 28, 2015). District Judge William Johnson dismissed the suit for lack of jurisdiction after concluding that the claim to compel arbitration of a contractual dispute did not raise an issue of federal law. See Compl. ¶ 32; MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION AND DENYING THE MOTION WITH REGARD TO OTHER GROUNDS FOR DISMISSAL (Doc. No. 36), Amerind Risk Mgmt. Corp. v. Blackfeet Hous., No. 15-cv-00072 WJ/KBM (D.N.M. May 11, 2015). Plaintiff filed an appeal in the Court of Appeals for the Tenth Circuit, but voluntarily dismissed the appeal before argument. See Compl. ¶ 32; Amerind Risk Mgmt. Corp. v. Blackfeet Hous., No. 15-2089 (10th Cir. Mar. 2, 2016). The arbitration file was closed and is no longer pending. See Compl. ¶ 33.

         On October 1, 2015, the Blackfeet Tribal Court denied Plaintiff's motion to dismiss after concluding that Plaintiff did not have tribal sovereign immunity and that the Blackfeet Tribal Court had jurisdiction to decide Defendant's claim. See Compl. ¶ 30; Resp. Ex. 2, Blackfeet Hous. v. Amerind Risk Mgmt. Corp., Case No. 2014 CA-60 (Order filed Oct. 1, 2015). Plaintiff appealed the jurisdictional issue to the Blackfeet Court of Appeals, which heard oral argument on March 22, 2016, but had not yet decided the case when Plaintiff filed this suit for declaratory and injunctive relief from the tribal litigation. See Compl. ¶¶ 31, 34. However, the Blackfeet Court of Appeals has since issued its decision, holding that Plaintiff did have tribal sovereign immunity as a Section 17 tribal corporation, but that Plaintiff had waived that immunity by including an arbitration clause in its contractual agreement. See Resp. Ex. 3, Blackfeet Hous. v. Amerind Risk Mgmt. Corp., Cause No. 2015-AP-09 (Order filed Nov. 7, 2016). The Blackfeet Court of Appeals acknowledged Plaintiff's argument that any waiver of immunity was limited to the courts specified in the PA for enforcement of the arbitration provision, and stated that the Court would normally agree. See Resp. Ex. 3, Blackfeet Hous. v. Amerind Risk Mgmt. Corp., Cause No. 2015-AP-09, at 16, ¶ 20 (Order filed Nov. 7, 2016). But without pointing to any reason for an exception to the limited waiver, the Blackfeet Court of Appeals appears to have concluded that it had jurisdiction. See Id. at 16-18, ¶¶ 20-25. The Blackfeet Court of Appeals ordered the parties to “proceed to mediation as contemplated by the Participation Agreement and thereafter to arbitration if needed.” See Id. at 18, ¶ 25. Because it concluded that Plaintiff “previously failed to properly mediate this dispute, and caused Blackfeet Housing to incur costs for an illusory mediation at great expense, ” the Blackfeet Court of Appeals ordered that Plaintiff would be “responsible for the entire expense of the future mediation.” See Id. at 18, ¶ 25.

         II. DISCUSSION

         Plaintiff contends that the Blackfeet Tribal Court and the Blackfeet Court of Appeals lack jurisdiction over Plaintiff and therefore lack jurisdiction to issue any orders regarding the claims brought by Defendant against Plaintiff in the Blackfeet Tribal Court. See Compl. ¶¶ 38-43. Plaintiff states that because Defendant expressly waived exhaustion of tribal remedies in the PA, the Blackfeet tribal courts are not entitled to determine their jurisdiction in the first instance. See Compl. ¶¶ 44-45. Additionally, Plaintiff maintains that the Blackfeet courts have already had that opportunity. See Compl. ¶ 46. Plaintiff asks this Court to declare that the Blackfeet courts lack jurisdiction over Plaintiff and to enjoin Defendant from continuing litigation against Plaintiff in the Blackfeet tribal courts. See Compl. ¶¶ 38, 49.

         Defendant has moved to dismiss Plaintiff's Complaint under Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), 12(b)(6), and the principle of deference to tribal courts. See Mot. at 2. Defendant argues that this Court's dismissal of Plaintiff's prior suit for lack of federal question jurisdiction and Plaintiff's voluntary dismissal of its Tenth Circuit appeal after raising the issue of diversity jurisdiction preclude Plaintiff from establishing this Court's subject matter jurisdiction over this case. See Memo. at 7-8. Additionally, Defendant asserts that this Court lacks personal jurisdiction over Defendant and that Plaintiff has failed to exhaust tribal remedies. See Memo. at 8.

         In resolving the Motion, the Court will take the well-pleaded allegations of the Complaint as true, and it will not consider materials outside of the pleadings other than those referenced in the Complaint and central to Plaintiff's claim, those necessary to resolve jurisdictional facts, and court documents of which the Court may take judicial notice. See Pace v. Swerdlow, 519 F.3d 1067, 1072-73 (10th Cir. 2008) (in resolving a motion to dismiss, district courts may properly consider documents referred to in the complaint and central to the plaintiff's claim, and may take judicial notice of adjudicative facts); Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995) (when jurisdictional facts are challenged, the district court may consider materials outside the pleadings without converting the motion to one for summary judgment); St. Louis Baptist Temple, Inc. v. FDIC, 605 F.2d 1169, 1172 (10th Cir.1979) (“[F]ederal courts, in appropriate circumstances, may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.”).

         A. Subject ...


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