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Hydaburg Cooperative Assoc. v. Hydaburg Fisheries (2/21/92), 826 P 2d 751
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Notice: This is subject to formal correction
before publication in the Pacific Reporter.
Readers are requested to bring typographical
or other formal errors to the attention of
the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, in order
that corrections may be made prior to
permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
HYDABURG COOPERATIVE ASSOCIATION, )
OF HYDABURG, ALASKA, an Alaska ) Supreme Court File
Cooperative Corporation; MARY E. ) No. S-4139
GUSS; CLIFFORD H. SMITH, an ) Superior Court No.
Alaska Professional Corporation, ) 1KE-88-866 CI
)
Appellants, )
)
v. ) O P I N I O N
)
HYDABURG FISHERIES, a Partnership )
and HYDABURG FISHERIES, INC., an )
Alaska Corporation, )
)
Appellees. ) [No. 3813 - February 21, 1992]
)
Appeal from the Superior Court of the
State of Alaska, First Judicial District,
Ketchikan,
Thomas M. Jahnke, Judge.
Appearances: Dennis L. McCarty, Law
Offices of Clifford H. Smith, Ketchikan, for
Appellants. Paul L. Dillon, Dillon &
Findley, Juneau, and Anthony L. Rafel and
David N. Mark, Culp, Guterson & Grader,
Seattle, for Appellees.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
COMPTON, Justice.
RABINOWITZ, Chief Justice, concurring in
part, dissenting in part.
This appeal arises out of a dispute over a joint
venture agreement between Hydaburg Cooperative
Association (HCA) and Hydaburg Fisheries to operate a
fish processing plant in Hydaburg, Alaska. The dispute
arose when the United States Department of Commerce
Economic Development Administration (EDA) failed to
approve the agreement. EDA's approval was necessary
because HCA had received an EDA grant to develop the
plant. Pursuant to the terms of the agreement, the
parties submitted the dispute to arbitration. The
arbitrators awarded Hydaburg Fisheries the value of the
improvements it had made to the plant. HCA did not
object to the award, but appeals the superior court's
order directing application of the HCA's property to
the judgment against it. HCA contends that it has
sovereign immunity and that section 16 of the Indian
Reorganization Act, 25 U.S.C. 476, protects its
assets from execution. We are unpersuaded by either of
HCA's arguments and therefore affirm the superior
court's order.
I. FACTUAL AND PROCEDURAL BACKGROUND
HCA is a corporation chartered under the Indian
Reorganization Act (IRA), 25 U.S.C. 476-77, as made
applicable to Alaska Native groups by 25 U.S.C. 473a
(1988).1 Hydaburg Fisheries was a partnership composed
of Marvin Dragseth and Milton Slater. Hydaburg
Fisheries, Inc., is the successor corporation to
Hydaburg Fisheries. Unless otherwise required,
Hydaburg Fisheries and Hydaburg Fisheries, Inc. will be
referred to as Hydaburg Fisheries.
In July 1987, HCA and Hydaburg Fisheries executed a
joint venture agreement to equip and operate a fish
processing plant in a building owned by HCA. The
agreement recited that HCA owned a 12,600 square foot
building containing blast freezers and areas for fish
processing; that Hydaburg Fisheries had knowledge,
contacts, equipment for processing, and operating
capital; and that these resources would be pooled to
form a joint venture. After payment of debt and
operating expenses, any profits were to be split
equally. In the event of a dispute between the
parties, the agreement provided that "the matter shall
be settled in accordance with the Uniform Arbitration
Act of the State of Alaska."
Prior to execution of the joint venture agreement,
Hydaburg Fisheries invested substantial sums of money
to improve the building. According to Hydaburg
Fisheries, the building lacked water, sewer, electrical
and other fixtures necessary to the operation of a fish
processing facility.
The building owned by HCA had been constructed using
grant monies from the (EDA), the United States
Department of Housing and Urban Development (HUD), and
the State of Alaska. When in early 1987 the parties
first began discussing doing business together, HCA
advised Hydaburg Fisheries that the approval of EDA,
HUD, and the State of Alaska was necessary before HCA
could enter into any agreement concerning the building.
Hydaburg Fisheries asserts that on or about July 23,
1987, HCA's attorney, Mary Guss, informed Hydaburg
Fisheries that the necessary agency approvals had been
received and that the parties could formally execute
the agreement.2
EDA did not in fact receive a copy of the agreement
until nine months after it had been signed. In October
1988, EDA advised HCA that the joint venture agreement
violated the grant from EDA to HCA.
Hydaburg Fisheries requested assurance from HCA in
November 1988 that HCA would repay the grant as EDA had
requested or, in the alternative, that it provide
Hydaburg Fisheries with written assurances from EDA
that the agency would not exercise its regulatory
authority to foreclose the property during the
unexpired term of the joint venture agreement.
Hydaburg Fisheries also requested HCA to agree to
suspend operations at the plant pending receipt of such
assurance, to pay its share of the joint venture's
financial losses for 1987 and to provide assurance that
it would have adequate financial resources to share in
any future losses.3 Hydaburg Fisheries did not receive
any of the requested assurances and consequently
terminated the joint venture agreement.
Hydaburg Fisheries sued HCA for violation of the Alaska
Partnership Act, breach of contract, unjust enrichment
and negligent misrepresentation. In response, HCA
moved the court to order arbitration of the dispute
pursuant to paragraph 14 of the joint venture
agreement.4 The court granted HCA's motion and
appointed three arbitrators.
The arbitrators held a hearing in Ketchikan on October
23-27, 1989, at which witnesses testified and exhibits
were admitted in evidence. The arbitrators found HCA
liable for breach of contract and unjust enrichment,
and awarded Hydaburg Fisheries damages of $201,270 to
compensate it for "the value to [HCA] of the capital
improvements to the cold storage facility." In
addition, the arbitrators awarded Hydaburg Fisheries
the costs of removal and transportation of its
equipment from Hydaburg.5 The arbitrators denied
Hydaburg Fisheries' claims for violation of the
partnership act and for negligent misrepresentation,
and denied HCA's counterclaim. The superior court
confirmed the arbitration award and entered a judgment
against HCA.
On May 14, 1990, HCA filed an "Application for
Declaratory Judgment"that raised for the first time a
sovereign immunity defense based on section 16 of the
IRA. 25 U.S.C. 476 (1988).6 At the same time,
without offering to post security of any kind, HCA
moved to stay enforcement of the judgment against it.
The superior court denied the motion and HCA did not
appeal the order.
HCA then moved for a protective order so that it could
avoid Hydaburg Fisheries' efforts to identify the
association's assets subject to execution. On June 23,
1990, the superior court denied HCA's motion and
granted Hydaburg Fisheries' motion for a debtor
examination. Following a hearing, the court entered an
order on July 20, 1990, directing application of
property to satisfaction of the judgment. It is this
order that HCA now appeals.7
II. DISCUSSION
A. HCA is not Entitled to Sovereign Immunity.
We have held that Alaska Native associations generally
do not have sovereign immunity. Native Village of
Stevens v. Alaska Management & Planning, 757 P.2d 32,
34 (Alaska 1988). In Native Village of Stevens, we
stated that judicial recognition of a native group as a
sovereign is dependent on "whether Congress, or the
executive branch of the federal government, ha[s]
recognized the particular group in question as a
tribe." 757 P.2d at 34-35. HCA offered no
evidence to the trial court and fails to make any
argument on appeal that the federal government has
recognized the association as a tribe. Village
reorganization under section 16 by itself is not
sufficient to establish tribal status for purposes
concerning the doctrine of tribal sovereign immunity.
Native Village of Stevens, 757 P.2d at 40. Even the
dissent in Native Village of Stevens agrees with this
principle. 757 P.2d at 45 n.6 (Rabinowitz, C.J.
dissenting). See also State of Alaska v. Native
Village of Venetie, 856 F.2d 1384, 1387 (9th Cir.
1988).
Assuming arguendo that HCA would be entitled to
sovereign immunity based on its historical tribal
status, HCA waived its immunity by agreeing to
arbitrate its dispute with Hydaburg Fisheries. In
Native Village of Eyak v. GC Contractors, 658 P.2d 756,
760 (Alaska 1983), we held that a contractual agreement
to arbitrate waives any immunity from suit. Eyak had
entered into a contract with GC Contractors under which
GC Contractors was to build a community center for Eyak
on land leased by Eyak. Pursuant to an arbitration
clause in the contract, the parties submitted to
arbitration a dispute concerning Eyak's failure to pay
$13,745.98 due under the contract. The arbitrator
rejected Eyak's argument that it would not be bound by
any arbitration decision on the grounds of sovereign
immunity and awarded GC Contractors the full sum
sought. We affirmed the superior court's confirmation
of the arbitration award. Id.
The United States Court of Appeals for the Ninth
Circuit recently reached the opposite result, holding
that consent to arbitrate disputes arising out of 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. Pan American Co. v. Sycuan Band of Mission
Indians, 884 F.2d 416, 418-20 (9th Cir. 1989)
(affirming dismissal of Pan American's suit challenging
the validity of an amended bingo ordinance requiring
additional fees to operate the bingo business). The
Court held that waiver may only be found if the clause
"unequivocally and expressly indicates the [tribe's]
consent to waive its sovereign immunity." Id. at 418
(citing Santa Clara Pueblo v. Martinez, 436 U.S. 49, 59
(1978)).
Unlike Native Village of Eyak, Pan American did not
involve a suit to compel arbitration or enforce an
arbitration award. Instead, by challenging the
validity of a tribal ordinance, Pan American directly
attacked the tribe's authority to regulate affairs on
its reservation. 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.
This principle is well established in situations
involving foreign sovereigns. The Restatement of the
Foreign Relations Law of the United States provides:
[A]n agreement to arbitrate is a waiver
of immunity from jurisdiction in
(i) an action or other
proceeding to compel arbitration
pursuant to the agreement; and
(ii) an action to enforce
an arbitral award rendered pursuant
to the agreement; . . .
1 Restatement (Third) of the Foreign Relations Law of the United
States 456(2)(b) (1987); see also Foreign Sovereigns
Immunities Act, 28 U.S.C. 1605(a)(6) (1988); M.B.L.
Int'l Contractors, Inc., v. Republic of Trinidad and
Tobago, 725 F. Supp. 52 (D.D.C. 1989) (denying motion
to dismiss, for lack of jurisdiction, petition to
confirm arbitration award between Canadian contractor
and Republic of Trinidad and Tobago); Liberian Eastern
Timber Corp. v. Government of Republic of Liberia, 650
F. Supp. 73 (S.D.N.Y. 1986), aff'd, 854 F.2d 1314 (2d
Cir. 1987); Sperry Int'l Trade, Inc. v. Government of
Israel, 532 F. Supp. 901, 908-09 (S.D.N.Y. 1982)
(granting Sperry's motion to confirm arbitration award,
relying in part on section in contract providing that
Government of Israel "waives any and all rights to
claim sovereign immunity in any court of competent
jurisdiction within the U.S. with respect to any suit
in equity, action in law, or arbitration proceeding . .
. [and] further waives any right to sovereign immunity
with respect to any attachment, levy or execution
resulting from a decree or judgment of any of the
aforementioned courts on its commercial or quasi-
governmental property or any funds . . . deposited in
or handled by any banking institution or other entity
within the United States." (emphasis omitted));
Ipitrade Int'l v. Federal Republic of Nigeria, 465 F.
Supp. 824, 826 (D.D.C. 1978) (holding that Nigeria's
agreement to adjudicate all disputes arising under a
contract in accordance with Swiss law and by
arbitration under International Chamber of Commerce
rules constituted waiver of sovereign immunity under
Foreign Sovereign Immunities Act). Cf. Maritime Int'l
Nominees Establishment v. Republic of Guinea, 693 F.2d
1094 (D.C. Cir. 1982) (holding that agreement in
commercial contract between Republic of Guinea and
Liechtenstein corporation to submit future disputes to
arbitration conducted by International Center for
Settlement of Investment Disputes could not be deemed
an implicit waiver of Guinea's sovereign immunity
before district court, even though Center arbitrations
normally take place in Washington, D.C., since the
agreement did not foresee a role for United States
courts), cert. denied, 464 U.S. 815 (1983) (because
commercial activities of NNPC have no direct effect in
the United States, "[i]t is more probable than not that
NNPC did not contemplate that disputes concerning the
contract at issue would be resolved in a United States
court.").
Federal courts have explicitly held that Indian tribes
are not foreign states. Native Village of Noatak v.
Hoffman, 896 F.2d 1157, 1163 (9th Cir. 1990) (citing
Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1831)).
Nevertheless, the rationale of the cases relating to
waiver of immunity by foreign sovereigns is equally
applicable to waiver of sovereign immunity by Indian
tribes. An arbitration clause in an agreement executed
by an Indian tribe would be meaningless if it did not
constitute a waiver of the tribe's immunity from suit
to compel arbitration or to enforce an arbitration
award. Native Village of Eyak, 658 P.2d at 760.
The facts of this case establish that the superior
court had jurisdiction to enforce the arbitration award
against HCA. The parties in Pan American agreed to
"subject themselves to the jurisdiction of the American
Arbitration Association." 884 F.2d at 419. They did
not subject themselves to the jurisdiction of either
federal or state courts. The arbitration clause
between HCA and Hydaburg Fisheries, on the other hand,
states: "In the event of a dispute between the parties
hereto, the matter shall be settled in accordance with
the Uniform Arbitration Act of the State of Alaska."
The Alaska Uniform Arbitration Act gave the state
superior court jurisdiction to order arbitration and to
enter judgment on its arbitration awards. AS
09.43.170.
In addition, HCA itself requested the superior court to
order arbitration. HCA did not oppose confirmation of
the arbitration award, except as to the issue of the
arbitrators' fees. Finally, HCA did not appeal the
final judgment in the amount of the arbitration award
entered against the association by the superior court.
The court entered final judgment on May 9, 1990. Under
Rule of Appellate Procedure 204, HCA had 30 days to
appeal from the date shown on the certificate of
distribution. HCA's notice of appeal, not filed until
August 15, seeks review only of the July 20, 1990 Order
Directing Application of Property to Judgment.
B. HCA Failed to Prove that its Property is
Exempt from Execution.
While HCA cannot at this point challenge the judgment
against it, the association can protect certain of its
assets from execution under section 16 of the IRA.8
Section 16 provides in part:
In addition to all powers vested in any
Indian tribe or tribal council by existing
law, the constitution adopted by said tribe
shall also vest in such tribe or its tribal
council the following rights and powers: . .
. to prevent the sale, disposition, lease, or
encumbrance of tribal lands, interest in
lands, or other tribal assets without consent
of the tribe.
25 U.S.C. 476 (1988). In Matter of City of Nome, 780 P.2d 363,
367 (Alaska 1989), we held that section 16 bars the
city from foreclosing on lands owned by the Nome Eskimo
Community (NEC) without NEC's consent.
The relevant issue is whether HCA's assets subject to
the superior court's July 20, 1990 order are assets of
a section 16 or a section 17 organization. The IRA
permitted Native groups to form dual entities --
section 16 governments and section 17 corporations.9
Section 17 corporations are amenable to suit and their
assets are subject to execution. Section 16 entities
can hold property and protect it from disposition or
encumbrance without consent. See Parker Drilling Co.
v. Metlakatla Indian Community, 451 F. Supp. 1127, 1131
(D. Alaska 1978); City of Nome, 780 P.2d at 365-67;
Atkinson, 569 P.2d at 174-75.
Whether assets are exempt section 16 assets or non-
exempt section 17 assets is a matter of proof. In
upholding NEC's section 16 exemption in Matter of Nome,
we relied on the factual determination by the Board of
Equalization of the City of Nome, not challenged on
appeal, that the property was held by the section 16
entity, not the non-profit corporation. 780 P.2d at
365 n.2. In Parker Drilling, the court denied cross
motions for summary judgment, finding disputed issues
of fact as to whether the tribe's airport was operated
in a section 16 or section 17 capacity. 431 F. Supp.
at 1132-35. See also Opinion of the Solicitor,
Department of Interior, No. M-36545 (Dec. 16, 1958)
(quoted in Atkinson, 569 P.2d at 171-72) (emphasizing
need for documentary evidence to establish corporate
nature of assets).
The burden of proving a section 16 exemption from
execution was upon HCA.
A debtor claiming an exemption
generally must prove that his claim comes
within the exemption provisions. Where an
issue is left in doubt by the proof so that a
court would be required to speculate, the
party on which the burden of proof ultimately
rests must lose.
31 Am. Jur. 2d Exemption 367 (1989); accord Hancock v.
Stockmen's Bank & Trust Co., 739 P.2d 760, 761-63 (Wyo.
1987) (holding that exemptions are affirmative defenses
which debtor must assert and prove). This is
consistent with the general rule that a Native entity
asserting sovereign immunity bears the burden of
proving it is a tribe. See The Board of Equalization
for the Borough of Ketchikan v. Alaska Native
Brotherhood and Sisterhood, No. 14, 666 P.2d 1015, 1023
(Alaska 1983) (Rabinowitz, J., concurring). It is also
consistent with the general policy of placing the
burden on the party that controls the proof. See Sloan
v. Jefferson, 758 P.2d 81, 83 (Alaska 1988).10
HCA did not meet its burden of proving exemption at the
July 20, 1990 hearing. Arguably, who bears the burden
of proof is not determinative in this case. HCA's
failure was not that it presented unconvincing
evidence; HCA presented no evidence in response to that
offered by Hydaburg Fisheries concerning the ownership
of the assets at issue. In fact, HCA tried to avoid
the July 20 debtor examination hearing and refused to
provide discovery.
Sufficient evidence exists in the record to support the
superior court's order of execution. The order applies
only to those HCA assets involved in the joint venture
with Hydaburg Fisheries.11 Operation of a fish
processing facility was a section 17 corporate function
under paragraph 1 of the charter. The funds used to
construct the facility came to the corporation pursuant
to paragraphs 5(b) and (d) of the charter. The
corporation had authority to own and operate the
facility pursuant to paragraphs 5(b) and (e). The
corporation had authority to enter into the joint
venture agreement pursuant to paragraph 5(f). At the
July 20 hearing, HCA's president acknowledged that
HCA's entry into the joint venture agreement was a
"business decision"concurred by all members of the
board.12
AFFIRMED.
RABINOWITZ, Chief Justice, concurring in part,
dissenting in part.
The court correctly concludes that Hydaburg waived its
claim to sovereign immunity. Although I concur in this
result, I write separately because I disagree with the
court's analysis in reaching this conclusion.
It is settled law that when a tribe brings an action in
court, the tribe necessarily consents to the court's
jurisdiction to determine the claims brought against
the tribe.13 See, e.g., Washington v. Confederated
Bands of Yakima Indian Nation, 439 U.S. 463 (1979).
Accordingly, since HCA requested the superior court to
order arbitration, HCA necessarily consented to the
court's jurisdiction and waived any claims to sovereign
immunity. This consent disposes of the issue of
sovereign immunity, making discussion of contractual
arbitration provisions, and principles of international
law, superfluous.
The United States Supreme Court recently reaffirmed the
longstanding doctrine of tribal sovereign immunity.
Oklahoma Tax Comm'n v. Citizen Band of Potawatomi
Indian Tribe, U.S. , 112 L.Ed.2d 1112 (1991).
Writing for a unanimous court, Chief Justice Rehnquist
stated:
A doctrine of Indian tribal
immunity was originally enunciated by this
Court, and has been reaffirmed in a number of
cases. Turner v. United States, 248 U.S.
354, 358 (1919); Santa Clara Pueblo v.
Martinez, 436 U.S. 49, (1978). Congress has
always been at liberty to dispense with such
tribal immunity or to limit it. Although
Congress has occasionally authorized limited
classes of suits against Indian tribes, it
has never authorized suits to enforce tax
assessments. Instead, Congress has
consistently reiterated its approval of the
immunity doctrine. See, e.g., Indian
Financing Act of 1974, 88 Stat. 77, 25 U.S.C.
1451 et seq., and the Indian Self-
Determination and Education Assistance Act,
88 Stat. 2203, 25 U.S.C. 450 et seq. These
Acts reflect Congress' desire to promote the
"goal of Indian self-government, including
its `overriding goal' of encouraging tribal
self-sufficiency and economic development."
California v. Cabazon Band of Mission
Indians, 480 U.S. 202, 216 (1987). Under
these circumstances, we are not disposed to
modify the long-established principle of
tribal sovereign immunity.
Oklahoma Tax Comm'n, 112 L.Ed.2d at 1120.
One of the fundamental principles of tribal sovereign
immunity is that a tribe's immunity remains intact
unless surrendered in express and unequivocal terms.
Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58-59
(1978). Moreover, a waiver of sovereign immunity
cannot be implied, but must be unequivocally expressed.
Id. Accordingly, the Ninth Circuit Court of Appeals
has rejected the notion that contractual arbitration
provisions suffice to waive tribal immunity. Pan
American Co. v. Sycuan Band of Mission Indians, 884
F.2d 416 (9th Cir. 1989); see also American Indian
Agric. Credit Consortium, Inc. v. Standing Rock Sioux
Tribe, 780 F.2d 1374, 1377-78 (8th Cir. 1985); Wichita
and Affiliated Tribes v. Hodel, 788 F.2d 765, 773 (D.C.
Cir. 1986). In Pan American the court noted that,
based on its earlier holding in United States v.
Oregon, 657 F.2d 1009 (9th Cir. 1981), two subsequent
state court cases have interpreted contractual
arbitration provisions as waiving tribal immunity. 884
F.2d at 419 (citing Native Village of Eyak v. GC
Contractors, 658 P.2d 756 (Alaska 1983); Val/Del, Inc.
v. Superior Court, 703 P.2d 502 (Ariz. App.), cert.
denied, 474 U.S. 920 (1985)). Correcting the misconcep
tion that Oregon supported such a result, the court
stated: "Our decision in United States v. Oregon, 657
F.2d 1009 (9th Cir. 1981), in no way lessens the
fundamental principle that tribal sovereign immunity
remains intact unless surrendered in express and
unequivocal terms." Pan American, 884 F.2d at 419.
The Ninth Circuit emphasized that its earlier holding
in Oregon was not premised on the arbitration clause,
but on the tribe's consent to suit in prior, related
litigation. Id. at 420. Moreover, the court stated:
Whether or to what extent this
arbitration clause constituted a waiver of
the Band's tribal sovereign immunity turns on
the terms of that clause. Santa Clara Pueblo
commands that waiver may only be found if the
clause unequivocally and expressly indicates
the Band's consent to waive its sovereign
immunity.
Id. at 418 (citations omitted). The Pan American court conceded
that Oregon's finding of waiver probably tests the
outer limits of Santa Clara Pueblo's admonition against
implied waivers,"and noted that "several post-Oregon
Ninth Circuit cases have reaffirmed the principle that
tribal consent to suit must be unequivocally
expressed." Id. at 420.
Further, the court's reliance on principles of foreign
sovereign immunity under principles of international
law are, in my view, misplaced. The sovereign powers
of Indian nations have long been distinguished from
those powers of other sovereign nations. See Cherokee
Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1831). Indian
tribes are domestic dependent nations, which exercise
all powers of inherent sovereignty not otherwise
extinguished by acts of Congress. Id. Chief Justice
Marshall observed in Cherokee Nation that "[t]he
condition of the Indians in relation to the United
States is perhaps unlike that of any other two people
in existence. . . . [T]he relation of the Indians to
the United States is marked by peculiar and cardinal
distinctions which exist nowhere else." Id. at 16.
Because of the special relationship requiring the
United States to adhere strictly to the trust
relationship in its dealings with Indians, there is a
strong presumption against waiver by Indian tribes.
See Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978).
Therefore, the international law doctrine of foreign
sovereign immunity favoring waiver is inapplicable in
the context of tribal sovereign immunity.
I dissent from the majority's holding that HCA's assets
may be executed upon because HCA failed to meet its
burden of proving that its assets are protected under
16 of the IRA. The record shows that at the July 20,
1990 hearing, the superior court never reached the
issue of whether the assets were the assets of a 16
or 17 entity. Such a determination is necessary
before execution can be had on the judgment because
control over tribal assets is retained in the tribe's
governing body pursuant to 16, except where that body
specifically transfers assets to a 17 corporation.14
That HCA was involved in a commercial agreement does
not overcome the presumption that its assets are exempt
from execution unless specifically conveyed or set
aside to the 17 corporation. See S. Unique, Ltd. v.
Gila River Pima-Maricopa Indian Community, 674 P.2d
1376, 1382 (Ariz. App. 1983) ("The distinction to be
made is not between commercial and governmental
functions in order to determine the availability of the
defense of sovereign immunity."); see also Maryland
Casualty Co. v. Citizens Nat'l. Bank, 361 F.2d 517, 521
(5th Cir.), cert. denied, 385 U.S. 918 (1966) ("The
fact that the [] Tribe was engaged in an enterprise
private or commercial in character, rather than
governmental, is not material."). Thus, I believe that
in order for execution to be had against the assets of
HCA, it must first be shown that such assets were
conveyed or assigned to the 17 corporation.
_______________________________
1. The Hydaburg Cooperative Association was initially
organized in 1938 under a constitution and bylaws
enacted pursuant to section 16 of the IRA. 25 U.S.C.
476. At the time of its organization, the association
was granted also a corporate charter pursuant to
section 17 of the IRA 25 U.S.C. 477.
2. According to HCA, Diane Church, EDA project manager,
approved the joint venture agreement during a telephone
conversation with Mary Guss on June 11, 1987.
3. Hydaburg Fisheries had advanced all the operating
expenses. The processing plant lost approximately
$320,000 in 1987.
4. Apparently, HCA also filed an answer and a counterclaim
to Hydaburg Fisheries' complaint, but these documents
were not included in the record on appeal.
5. Removal costs were fixed at $17,163.28 and a final
decision was rendered in favor of Hydaburg Fisheries
for $218,433.28.
6. HCA also filed a "Complaint for Declaratory Judgment"
as a new action under Case No. 1KE-90-555 CI. The
complaint was never served and was ordered dismissed by
the superior court as a sanction for HCA's willful
failure to provide discovery regarding its assets.
7. On August 30, 1990, Hydaburg Fisheries moved for
sanctions against HCA for its refusal to produce
documents as required by the superior court's June 23
and July 20, 1990 orders. The court granted this
motion. Although HCA did not appeal the sanctions,
according to Hydaburg Fisheries the association has
neither produced the documents nor paid the sanctions
and fees.
8. Again, the Restatement is instructive:
Under international law:
. . .
a waiver of immunity from suit does not
imply a waiver of immunity from attachment of
property . . . .
Restatement (Third) of the Foreign Relations Law of the United
States 456(1)(b) (1987); see also Letelier v.
Republic of Chile, 748 F.2d 790 (2d Cir. 1984)
(rejected district court's rationale that if
jurisdictional immunity is lifted, the presumption is
that there will be a right to execute).
If HCA were a foreign sovereign, the court's order
directing application of its property to judgment would
be valid under the Foreign Sovereign Immunities Act
(Act). The Act provides in part:
The property in the United States of a
foreign state . . . shall not be immune from
attachment in aid of execution, or from
execution, upon a judgment entered by a court
of the United States or of a State . . . if
. . .
(2) the property is or was used for the
commercial activity upon which the claim is
based, or
. . .
(6) the judgment is based on an order
confirming an arbitral award rendered against
the foreign state, provided that attachment
in aid of execution, or execution, would not
be inconsistent with any provision in the
arbitral agreement.
28 U.S.C. 1610 (1988); see also Restatement (Third) of the
Foreign Relations Law of the United States
460(2)(b)(1987).
9. Section 16 of the IRA provides in part:
Any Indian tribe, or tribes, residing on
the same reservation, shall have the right to
organize for its common welfare, and may
adopt an appropriate constitution and bylaws,
which shall become effective when ratified by
a majority vote of the adult members of the
tribe, or of the adult Indians residing on
such reservation, as the case may be, at a
special election authorized and called by the
Secretary of the Interior under such rules
and regulations as he may prescribe.
25 U.S.C. 476 (1988).
Section 17 provides:
The Secretary of the Interior may, upon
petition by at least one-third of the adult
Indians, issue a charter of incorporation to
such tribe: Provided, That such charter
shall not become operative until ratified at
a special election by a majority vote of the
adult Indians living on the reservation.
Such charter may convey to the incorporated
tribe the power to purchase, take by gift, or
bequest, or otherwise, own, hold, manage,
operate, and dispose of property of every
description, real and personal, including the
power to purchase restricted Indian lands and
to issue in exchange therefor interests in
corporate property, and such further powers
as may be incidental to the conduct of
corporate business, not inconsistent with
law, but no authority shall be granted to
sell, mortgage, or lease for a period
exceeding ten years any of the land included
in the limits of the reservation. Any
charter so issued shall not be revoked or
surrendered except by Act of Congress.
25 U.S.C. 477 (1988). Both sections have been slightly amended
since 1988. 25 U.S.C.A. 476-77 (West Supp. 1991).
None of the changes are relevant to this case.
We have recognized that section 16 governmental units
and section 17 corporations are separate legal
entities. Atkinson v. Haldane, 569 P.2d 151, 174
(Alaska 1977) ("sue and be sued clause in corporate
charter did not waive tribal government's immunity from
suit in wrongful death action by two Metlakatla Indians
on the Metlakatla reservation.").
10. This position does not require us to reject the
presumption that the assets of a Native group belong to
the governmental unit rather than to the section 17
corporation. See Atkinson, 569 P.2d at 172 ("Unless
documentary evidence such as a conveyance to the
business corporation or contractual agreement, by
resolution or otherwise, gives the business corporation
an agency or proprietary relationship to certain
property, it can be assumed that the corporation is not
directly involved.") (quoting Opinion of the Solicitor,
Department of Interior, No. M-36545 (Dec. 16, 1958)).
Nor is the position inconsistent with the general tenet
of Indian law that all ambiguities must be resolved in
favor of the Indians. See Santa Rosa Band of Indians
v. King County, 532 F.2d 655, 660 (9th Cir. 1975);
Parker Drilling, 451 F. Supp. at 1140; City of Nome,
780 P.2d at 367. The normal presumption in favor of a
Native group is inapplicable when such group is
claiming an exemption from debt.
11. Execution against the fish processing building itself is
particularly appropriate since much of the building's
value is attributable to capital improvements made by
Hydaburg Fisheries.
12. HCA argues that we should remand the case to the
superior court for a determination of whether HCA was a
section 16 or section 17 entity. Such action is
inappropriate in light of HCA's failure to request the
trial court to make such a finding. As a general rule,
we will not consider an issue raised for the first time
on appeal. State v. Northwestern Const., Inc., 741
P.2d 235, 239 (Alaska 1987). The exceptions to this
rule are inapplicable. HCA's argument depends on new
and controverted facts and as discussed above the
superior court's ruling does not constitute "plain
error."
13. This consent does not apply to crossclaims. United
States v. United States Fidelity & Guar. Co., 309 U.S.
506 (1940). Neither does a tribe waive its sovereign
immunity by filing an action for declaratory relief.
Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian
Tribe, U.S. , 112 L.Ed.2d 1112 (1991).
14. 25 U.S.C. 476 expressly gives tribes organized under
it the right to "prevent the sale, disposition, lease,
or encumbrance of tribal lands, interests in lands, or
other tribal assets without the consent of the tribe."
See also F. Cohen, Federal Indian Law 326 n.381 (1982
ed.).
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