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Ute Indian Tribe of Uintah and Ouray Reservation v. Lawrence

United States District Court, D. Utah, Central Division

January 31, 2018

HONORABLE BARRY G. LAWRENCE, District Judge, Utah Third Judicial District, and LYNN D. BECKER, Defendants.



         This case presents a clash between the parties' claims as to which court has jurisdiction over a state law contract dispute: the Ute Indian Tribal Court or the state courts of Utah. The dispute is between a non-Indian, Lynn Becker, and the Ute Indian Tribe of the Uintah and Ouray Reservation (the Tribe)[1] under a contract that includes express waivers of the Tribe's sovereign immunity and any requirement for exhaustion of remedies in the Tribal Court. The Tribe's Business Committee approved the contract by a resolution that incorporated the contract by reference. The Tribe was represented in the transaction by experienced and competent counsel. A tribal ordinance in force at the time expressly stated that the Tribal Court lacked jurisdiction over such a dispute with the Tribe. In connection with entering the contract with Becker, the Tribe adopted the Ute Energy Operating Agreement, amended three times, for which the Tribe requested and received certification from the United States Department of the Interior, Bureau of Indian Affairs, that no federal approval was required because it created no interest in trust lands subject to approval. The Operating Agreements provided for the distribution of Ute Energy's profits and losses, a percentage to which Becker now claims he is entitled.

         Becker alleges that, after he fully performed all obligations required by the contract, the Tribe refused to pay him according to the terms of the contract. After accepting full performance under the contract, and after a change in the makeup of the Business Committee, the Tribe now claims the contract was void from the beginning and that the express waivers, including waivers of sovereign immunity and tribal jurisdiction, have no effect. The dispute has now been pending in state court for more than three years and is set to begin a nine-day jury trial on February 20, 2018. The state court has heard and rejected the Tribe's arguments, finding that it has jurisdiction over the dispute, and the Tribe's requests for interlocutory appeals in the state appellate courts have been denied. Moreover, the issues of waiver and jurisdiction have been raised in three separate appeals to the Tenth Circuit, resulting in decisions that have left resolution of the jurisdictional dispute to this court in the first instance.

         On remand from the Tenth Circuit, the Tribe now asks this court to enter a temporary restraining order and preliminary injunction precluding the state court from trying Becker's breach of contract claims. The United States Supreme Court, and other lesser courts, have provided strong guidance that this court should allow the state court to determine its own jurisdiction, except in the most extraordinary circumstances. This is particularly true when, as here, the underlying merits presented for declaratory judgment in this court are primarily federal defenses to the state law claims now poised for resolution by the state court. For the reasons set forth below, the court declines to exercise supplemental jurisdiction and stays this case pending resolution of the issues before the state court, the state courts of appeal, and any possible appeal to the United States Supreme Court. Where such remedies are available to the parties, this court should refrain from becoming involved.


         Becker entered an independent contractor agreement (the contract) with the Tribe, effective 2004, to provide services related to the Tribe's development of its energy and mineral resources. (ECF No. 4-1.) The contract contains the following provisions:

Article 21. Governing law and Forum. This Agreement and all disputes arising hereunder shall be subjected to, governed by and construed in accordance with the laws of the State of Utah. All disputes arising under or relating to this Agreement shall be resolved in the United States District Court for the District of Utah.
. . .
Article 23. Limited Waiver of Sovereign Immunity; Submission to Jurisdiction. If any Legal Proceeding (definition follows) should arise between the Parties hereto, the Tribe agrees to a limited waiver of the defense of sovereign immunity, to the extent such defense may be available, in order that such legal proceeding be heard and decided in accordance with the terms of this Agreement. . . . The Tribe specifically surrenders its sovereign power to the limited extent necessary to permit the full determination of questions of fact and law and the award of appropriate remedies in any Legal Proceeding.
The Parties hereto unequivocally submit to the jurisdiction of the following courts: (i) U.S. District Court for the District of Utah, and appellate courts therefrom, and (ii) if, and only if, such courts also lack jurisdiction over such case, to any court of competent jurisdiction and associated appellate courts. . . . the Tribe waives any requirement of Tribal law stating that Tribal courts have exclusive original jurisdiction over all matters involving the Tribe and waives any requirement that such Legal Proceedings be brought in Tribal Court or that Tribal remedies be exhausted.


         In February 2013, following a dispute concerning Becker's compensation under the contract, Becker sued the Tribe in the United States District Court for the District of Utah for breach of contract, breach of the covenant of good faith and fair dealing, and accounting claims. The Tribe moved to dismiss under Rules 12(b)(1) and 12(b)(6). Judge Dee Benson dismissed the action, concluding that under the “well-pleaded complaint rule” Becker's causes of action were all state causes of action and thus the complaint did not meet the federal question requirement set forth in 28 U.S.C § 1331. Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation, No. 2:13-cv-123-DB, 2013 WL 5954391, at *1 (D. Utah Nov. 5, 2013) (unpublished). Judge Benson noted that although the Tribe had raised defenses that posed federal questions, such as tribal sovereignty and approval by the Department of Interior, “the Supreme Court has repeatedly stated that there is no federal-question jurisdiction based solely on possible federal defenses.” Id. (citing Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 808 (1986) (“A defense that raises a federal question is inadequate to confer federal jurisdiction.”)).

         The Tenth Circuit affirmed Judge Benson's decision. Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation, 770 F.3d 944 (10th Cir. 2014). Citing both Merrell Dow Pharmaceuticals and Oklahoma Tax Commission v. Graham, 489 U.S. 838, 841 (1989), the Tenth Circuit held that “Becker's federal issues are merely federal defenses, which do not give rise to federal question jurisdiction under 28 U.S.C. § 1331.” Id. at 947-48. The Tenth Circuit explained, “the Supreme Court has singled out tribal sovereign immunity as a type of federal defense that ‘does not convert a suit otherwise arising under state law into one which, in the [§ 1331] sense, arises under federal law.'” Id. at 948 (citing Graham, 489 U.S. at 841). “This is because ‘the underlying right or obligation arises only under state law and federal law is merely alleged as a barrier to its effectuation.'” Id. (citing State of Okla. ex rel. Okla. Tax Comm'n v. Wyandotte Tribe of Okla., 919 F.2d 1449, 1451 (10th Cir. 1990)).

         In response to the rulings that the United States District Court for the District of Utah, which was designated by the contract to hear disputes in the first instance, lacked jurisdiction, Becker filed suit in the Third Judicial District Court of Salt Lake County (state court action) for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. (ECF No. 67-3.) The Tribe moved to dismiss, and on July 23, 2015, Judge Barry Lawrence denied the Tribe's motion. Judge Lawrence found, in part, (1) that the independent contractor agreement “contained a clear and express waiver of sovereign immunity” and was “accompanied by the required Resolution in which the Tribal Business Committee resolved to enter the Agreement;” (2) that this process complied with Ute Law section 1-8-5; (3) that the Tribe contractually “consented to any court of competent jurisdiction and thus consented to suit in Utah;” and (4) that Public Law 280 does not prohibit “a non PL-280 State like Utah from having jurisdiction in a case where the Tribe has consented to jurisdiction.” (Order Denying Mot. to Dismiss 2-3, ECF No. 67-4 (citing C & L Enters., Inc. v. Citizen Band Indian Tribe, 532 U.S. 411 (2001) (holding that a court in a non Public Law 280 state (Oklahoma) had jurisdiction to enter an order in a contract dispute between a private actor and a tribe)).)[2] The Tribe attempted to appeal the state court's order, but, in September 2015 the Utah Court of Appeals dismissed the appeal for lack of jurisdiction, citing the absence of a final appealable order. (See ECF No. 12 at ¶ 6.) On June 23, 2017, the Utah Supreme Court also denied a petition for writ of certiorari. Becker v. Ute Indian Tribe, 398 P.3d 54 (Utah 2017).

         In June 2016--a year and a half after the state court action was remitted back to the Third District Court and discovery was initiated--the Tribe filed this action against Becker and Judge Lawrence in the United States District Court for the District of Utah, Judge Robert J. Shelby presiding. (ECF No. 2.) The Complaint alleges the Tribe is entitled to the following: (1) declaratory judgment that the state court lacks subject matter jurisdiction; (2) declaratory judgment finding the independent contract agreement void under federal and tribal law; (3) declaratory judgment that the Tribe did not waive sovereign immunity; and (4) injunctive relief enjoining the state court from further proceedings.[3] (Id.) The Tribe also filed a Motion for Temporary Restraining Order and Preliminary Injunction (Original TRO). (ECF No. 13.) The crux of the Tribe's Original TRO was that the contract is void because it was not approved by the Department of the Interior, and that the waiver of sovereignty provision is invalid because it was not approved by the Tribe's Business Committee, as required by tribal law. (See id.)

         In response to the Tribe's federal complaint, Judge Lawrence filed a motion to dismiss. (ECF No. 12.) Judge Lawrence argued that several doctrines-including Rooker-Feldman, Younger and Colorado River abstention, judicial immunity, and Eleventh Amendment immunity-protected the state court from being sued in federal court, especially by a losing party complaining of injuries caused from state court judgments. (See id.) Becker likewise filed a motion to dismiss the Tribe's Complaint, incorporating by reference Judge Lawrence's arguments and alleging the court lacked subject matter jurisdiction under 28 U.S.C §§ 1331 and 1362. (ECF No. 19.)

         In August 2016, Judge Shelby granted Becker's motion to dismiss for lack of subject matter jurisdiction after dismissing the Tribe's purported 42 U.S.C. § 1983 and § 1985 claims without prejudice. (ECF No. 40.) Judge Shelby expressly found that the lack of jurisdiction rendered the Tribe's Original TRO and Judge Lawrence's motion to dismiss moot. (Id. at 2.) The Tribe appealed.

         On appeal, Judge Lawrence argued that dismissal was appropriate under principles of judicial immunity and that the state court could review the Tribe's sovereign immunity and preemption arguments. Appellee Hon. Barry G. Lawrence's Br. 3, 11-14, Ute Indian Tribe v. Lawrence, No. 16-4154, (10th Cir. Dec. 5, 2016), No. 0109730643. Becker joined the appeal, arguing that the district court lacked § 1331 jurisdiction because the defenses of preemption and tribal sovereignty did not create a federal question. Br. of Appellee Lynn D. Becker 8-15, Ute Indian Tribe v. Lawrence, No. 16-4154, (10th Cir. Dec. 5, 2016), No. 01019730944.

         The Tenth Circuit held oral argument on the Tribe's interlocutory appeal on January 18, 2017, after which Becker submitted supplemental briefs. First, Becker submitted a copy of a February 9, 2017 order Judge Lawrence issued denying the Tribe's motions for summary judgment. Rule 28(j) Notice of Significant Suppl. Authority, Ute Indian Tribe v. Lawrence, No. 16-4154, (10th Cir. Feb. 10, 2016), No. 01019763617.[4] Becker also submitted an order issued by the Tribal Court, wherein the Tribal Court determined it would decide whether the Tribe had waived the Tribal Court's jurisdiction. Order Denying OSC, Ute Indian Tribe v. Lawrence, No. 16-4154, (10th Cir. Jun. 14, 2016), No. 01019825134.

         While the interlocutory appeal was pending, Judge Lawrence denied the Tribe's motion to stay the state court action. (Ruling & Order dated Mar. 22, 2017, ECF No. 67-7.) Judge Lawrence also denied the Tribe's Motions for Reconsideration. (Ruling & Order dated Sept. 15, 2017, ECF No. 67-8.) Judge Lawrence concluded:

Defendants' Motions are just another attempt to have a second - actually a third or perhaps fourth - bite at the proverbial apple. That is not the purpose of any of the post-judgment Rules, and the Court is not persuaded that it should re-address any of its prior rulings.

(Id. at 6.)

         In August 2017, the Tenth Circuit issued its first decision on the Tribe's interlocutory appeal. Ute Indian Tribe v. Lawrence, 868 F.3d 1189 (10th Cir. 2017), rev'd en banc, 875 F.3d 539 (10th Cir. 2017). This opinion stated in part:

Of special relevance to our case is a federal statute[5]-Public Law 280, ch. 505, 67 Stat. 588 (1953) (codified as amended at 18 U.S.C. § 1162; 25 U.S.C. §§ 1321-1326; 28 U.S.C.§ 1360)-that, for most states, grants state-court jurisdiction over litigation arising in Indian country in which an Indian is a party only when certain actions are taken by a state or tribe.
. . .
Relevant to this case, Utah did not adopt the required legislation before the 1968 amendment and nothing in the record indicates that the Tribe has ever given consent to state-court jurisdiction. See United States v. Felter, 752 F.2d 1505, 1508 n.7 (10th Cir. 1985) (“Although Utah since has indicated its willingness to assume this jurisdiction, no Indian tribe has accepted its offer.”); Cohen's Handbook of Federal Indian Law (Cohen) § 6.04[3][a], at 537-38 n.47 (Nell Jessup Newton ed., 2012) (“Utah has a post-1968 statute accepting jurisdiction when tribes consent . . . . No. tribe has consented.”).[6]
Thus, it is clear that whether the state court has jurisdiction to hear Mr. Becker's claim is a matter of federal law. The only remaining question is whether the Tribe's suit seeking an injunction to halt the proceedings in state court is an action ‘arising under' federal law (so that there is jurisdiction under 28 U.S.C. § 1331) or whether “the matter in controversy [in this suit] arises under” federal law (so that there is jurisdiction under 28 U.S.C. § 1362). The parties agree that the difference in language in the two statutes is immaterial to the issue before us. We hold that the jurisdictional predicate is satisfied.

Id., No. 16-4154, slip op. at 6-8 (10th Cir. Aug. 25, 2017).

         In contrast with the Tenth Circuit's decision affirming Judge Benson's decision in Becker v. Ute Tribe, 770 F.3d 944 (10th Cir. 2014), which was based on Graham, here the Tenth Circuit cited National Farmers Union Insurance Cos. v. Crow Tribe of Indians, 471 U.S. 845, 851-52 (1985), as the controlling precedent.[7] Ute Indian Tribe v. Lawrence, 875 F.3d 539, 547 (10th Cir. 2017). The Tenth Circuit explained:

We hold that the Tribe's claim-that federal law precludes state-court jurisdiction over a claim against Indians arising on the reservation-presents a federal question ...

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