Dicara v. Cahuilla Band of Indians

Filed 12/10/09 Dicara v. Cahuilla Band of Indians CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of Riverside County. Douglas E. Weathers, Judge. Affirmed.

Forman & Associates, George Forman, Kimberly A. Cluff, Jay B. Shapiro and Jeffrey R. Keohane for Defendant and Appellant.

Robert A. Garcia for Plaintiff and Respondent.

The trial court issued a postjudgment assignment order (Code of Civ. Proc.,  708.510)^{[1], [2]}against the Cahuilla Band of Indians (Cahuilla), in favor of Mary DiCara dba Scott Leasing (Scott). Cahuilla contends the assignment order should be reversed because (1) the superior court did not have jurisdiction to issue the order; (2) the lease agreement, upon which the underlying damage award was based, was void since inception; and (3) federal law and Cahuillas revenue allocation plan preempt the superior courts order. Scott contends that it should be awarded attorneys fees on appeal. We affirm the judgment and award attorneys fees to Scott.

FACTUAL AND PROCEDURAL HISTORY

The underlying damage award resulted from a finding that Cahuilla breached a lease agreement with Scott. We present the pertinent terms of the lease agreement, followed by the facts and procedural history.

A. Lease Agreement

Cahuilla operated the Cahuilla Creek Restaurant and Casino (the casino), which is a tribal corporation. On December 1, 1995, Scott and Cahuilla (the parties) entered into a lease agreement. Scott agreed to lease at least 100 gaming machines (slot machines) to Cahuilla. Cahuilla agreed to pay Scott 30 percent of the total net win for the length of time from the first day of operation and continuing for a period of sixty . . . months.

In the lease agreement, within the Sovereign Immunity clause, Cahuilla consented to a limited waiver of its sovereign immunity for purposes of enforcing the terms of the lease agreement, only under the following conditions: (1) Scott claimed that Cahuilla breached the lease agreement; (2) Scott presented the claim in writing, and gave Cahuilla 60 days to remedy the alleged breach; and (3) any money damages would be payable strictly from Cahuillas net revenue split from the gaming facility, and from no other source.

Also in the lease agreement, within the Dispute/Disagreement Resolution clause, Cahuilla and Scott agreed that all disputes arising out of or relating to the lease agreement would be settled by arbitration. The parties further agreed that an award rendered by the [a]rbitrator shall be final and binding upon the parties, not subject to appeal or review by any court, and must be paid within 30 days. The dispute resolution clause also provided that in the event Scott was awarded damages against Cahuilla, then the award shall be satisfied from tribal assets furnished by [Scott], including, but not limited to, net revenues obtained in the operation of [the g]aming [f]acility.

B. Facts

In September 1996, Cahuilla was experiencing cash flow problems. The parties agreed that Cahuilla could stop making lease payments to Scott; however, a dispute arose regarding the length of this forbearance period, and Cahuilla never made any further payments to Scott. In 2000 and 2001, Scotts attorney wrote letters to Cahuilla demanding payment of all monies past due.

C. Procedural History

An arbitrator found that Scott only agreed to a temporary forbearance, contrary to Cahuillas position that Scott agreed to an infinite forbearance. Accordingly, the arbitrator concluded that Cahuilla had breached the lease agreement by not making payments to Scott. On March 26, 2006, the arbitrator entered an award in favor of Scott, against Cahuilla. The superior court issued an order confirming the arbitration award in favor of Scott, and denying Cahuillas petition to vacate the award. On June 12, 2007, the superior court ordered Cahuilla to pay Scott (1) $1,000,541 plus 10 percent interest; (2) $150,000 in attorney fees; and (3) $24,500 in costs. Cahuilla appealed the trial courts confirmation of the arbitration award. On August 20, 2008, this court affirmed the judgment of the superior court (case No. E043500).

On September 10, 2008, Scott moved the trial court to enter an assignment order against Cahuilla to effectuate payment of the judgment. The trial court ordered Cahuilla to assign Scott $31,101.00 per month from the Cahuilla Creek Restaurant and Casino, with such amount being paid monthly until the judgment is satisfied.

DISCUSSION

A. Jurisdiction

1. Cahuilla

Cahuilla contends that the waiver of its sovereign immunity only extended as far as the profits made from the slot machines leased from Scott. Cahuilla asserts that the slot machines provided by Scott were removed from the casino prior to June 1, 1999, and therefore, that the trial court did not have jurisdiction, when making the assignment order, to direct Cahuilla to pay the damage award from the casinos current revenue. In other words, Cahuilla asserts that the profits from Scotts slot machines have already been spent, and because Cahuilla did not waive its immunity in regard to any other revenues, it cannot be ordered to pay Scott. We disagree.

Where, as here, the jurisdictional facts are undisputed, the question of jurisdiction is a purely legal question and, therefore, is subject to de novo review. [Citation.] (Shisler v. Sanfer Sports Cars, Inc. (2006) 146 Cal.App.4th 1254, 1259; see Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 449.) Further, the interpretation of a contract is subject to de novo review where the interpretation does not turn on the credibility of extrinsic evidence. [Citations.] (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 520, fn. omitted.)

When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is reasonably susceptible to the interpretation urged by the party. If it is not, the case is over. [Citation.] If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean? [Citation.] (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., supra, 107 Cal.App.4th at p. 524.)

In the lease agreement, Cahuilla waived its sovereign immunity with the condition that [a]ny money damages sought shall only be payable from [Cahuillas] net revenue split from the gaming facility, and from no other source. Accordingly, the contract does not limit Cahuillas immunity waiver to profits derived from Scotts slot machines, but to the net revenue that Cahuilla receives from the gaming facility.

Moreover, in a second waiver provision, Cahuilla agreed that [t]o the extent necessary to enforce the provisions of th[e] lease, [the lease agreement] shall be deemed to be a waiver of the inherent sovereign immunity of [Cahuilla] from uncontested suits or claims, with regard to the provisions of this lease only. Consequently, Cahuilla did waive its sovereign immunity to the extent necessary. In this case, because Cahuilla allegedly spent the profits from Scotts slot machines and because Cahuilla has been found to be in breach of the lease agreement, it is necessary to require Cahuilla to pay damages from the casinos current profits.

Further, the lease agreement also reflects that in the event Scott obtained an award of damages against Cahuilla, then the award shall be satisfied from tribal assets furnished by [Scott], including, but not limited to, net revenues obtained in the operation of th[e g]aming [f]acility. (Italics added.) Contrary to Cahuillas position, the lease agreement does not reflect that Scotts damage award may only be satisfied from profits generated by Scotts slot machines; if that were the case, the contract would likely read: the award shall only be satisfied from tribal assets furnished by Scott, and such assets are limited to net revenues obtained from the gaming machines furnished by Scott. No such limiting language was included in the lease. Quite the contrary, the lease included the phrase not limited to. Therefore, it is not persuasive for Cahuilla to argue that the lease agreement limited Cahuillas waiver of sovereign immunity to the profits generated by Scotts slot machines.

To support its argument that the damage award was limited to revenue from Scotts slot machines, Cahuilla relies on the sentence following the not limited to sentence. We set forth both sentences: The parties agree that in the event that [an] award of damages against [Cahuilla] is obtained by [Scott], the award shall be satisfied from tribal assets furnished by [Scott], including, but not limited to, net revenues obtained in the operation of this gaming facility. Other tribal assets are to be exempt from such award. Again, the language of the contract reflects that an award for damages shall be satisfied from assets furnished by [Scott]; however, it reflects that such assets include, but are not limited to, revenues from the operation of the gaming facility; which could include revenue from the restaurant, bar, or other profit generating sources within the gaming facility.

A literal interpretation of the phrase, from tribal assets furnished by [Scott] would mean the slot machines themselves, i.e., not the money deposited into the slot machines, which would be furnished by patrons. It is doubtful that Scott agreed to the sale of its slot machines to satisfy a damage award. Accordingly, the only logical interpretation of the sentence is that a damage award would be satisfied by revenue from the casino, i.e., the [g]aming [f]acility, and any other tribal property is exempt.

In sum, Cahuillas argument is unpersuasive, because we find no support for it within the language of the lease agreement. Therefore, we conclude that the trial court did have jurisdiction to issue the assignment order.

2. The Casino

Cahuilla contends that the trial court did not have jurisdiction to issue the assignment order because the court did not have jurisdiction over the casino, which is a sovereign tribal corporation, and is not a party to the lease agreement or the lawsuit. We disagree.

For reference, the trial courts order reflects: The Cahuilla Band of Indians is ordered to assign to [Scott] $31,101.00 per month from the Cahuilla Creek Restaurant and Casino, with such amount being paid monthly until the judgment is satisfied.

Section 708.510, subdivision (a) provides: [U]pon application of the judgment creditor on noticed motion, the court may order the judgment debtor to assign to the judgment creditor or to a receiver . . . all or part of a right to payment due or to become due, whether or not the right is conditioned on future developments . . . .

The trial court ordered Cahuilla to assign to Scott the payments due from the casinothe trial court did not direct the casino to pay Scott. Accordingly, the trial court did not exceed its jurisdiction by ordering the casino to pay Scott, rather the trial court followed the procedure set forth in section 708.510, subdivision (a), by requiring Cahuilla to assign to Scott all or a portion of the payments it receives from the casino. In sum, we find no error.

B. Invalid Lease Agreement

Cahuilla contends that the trial court lacked jurisdiction to issue the assignment order because the National Indian Gaming Commission (NIGC) found that the lease agreement was null and void from inception, under federal law (25 U.S.C. 2701 et seq. [Indian Gaming Regulatory Act]).^[3] In other words, Cahuilla asserts that the trial court did not have the authority to make the assignment order because the contract was unenforceable. We disagree.^[4]

Cahuilla seeks to invoke the rule that a void contract, a contract against public policy or against the mandate of [a] statute, may not be made the foundation of any action either in law or in equity, and therefore, a court should not retain jurisdiction over such an action. (Morey v. Paladini (1922) 187 Cal. 727, 733.)

Cahuilla does not cite to any portion of its appellants appendix to indicate when the NIGC made a final determination that the lease agreement was void from inception. Our own review of the record reveals that the NIGCs acting general counsel sent a letter to Cahuillas attorney. In the letter, NIGCs acting general counsel opined that (1) the lease agreement constituted a management contract,^[5]which would have required approval of NIGCs chairman; and (2) the lease agreement confers upon Scott an improper propriety interest in the casinos gaming activity. This letter does not appear to be a final determination by the NIGC; rather, it was an expression of the NIGCs belief that the agreement is a management contract. Therefore, the letter was only an advisory opinion or opinion letter. The letter was not a final determination, which might have binding authority. (See Jena Band of Choctaw Indians v. Tri-Millennium Corp., Inc. (W.D. La. 2005) 387 F.Supp.2d 671, 677 [discussing a similar NIGC letter].) The informal conclusions of an agency, which are not subject to agency rulemaking procedures, do not warrant our deference. (First American Kickapoo Operations, L.L.C. v. Multimedia Games, Inc. (10th Cir. 2005) 412 F.3d 1166, 1174 [discussing a NIGC letter].)

Although Cahuilla does not provide any record citations in its opening brief, it appears that the letter from the NIGC is the sole basis for the assertion that the lease agreement was void from inception. The NIGCs opinion letter is not entitled to our deference. Accordingly, we are not persuaded that the superior court acted without jurisdiction when it issued the assignment order.

C. Preemption

Cahuilla contends that federal law and Cahuillas Revenue Allocation Plan (RAP) (25 U.S.C. 2710(b)(2)(B) & (b)(3)(A)) preempt the trial courts authority to order 100 percent of the casino revenues received by Cahuillas government to be paid to Scott. We disagree.

When the issues regarding federal preemption involve undisputed facts, it is a question of law whether a federal statute or regulation preempts a state law claim . . . on appeal, therefore, we apply the de novo standard of review. (In re Wholesale Electricity Anti-Trust Cases I & II (2007) 147 Cal.App.4th 1293, 1304.)

There are four different types of preemption that have been recognized by our Supreme Court: (1) express preemption, which occurs when Congress explicitly defines the extent to which federal law preempts state law; (2) conflict preemption, which happens when it is impossible to comply with both state and federal laws; (3) obstacle preemption, which arises when a state law creates an obstacle to the full execution of a federal objective; and (4) field preemption, which applies where the scheme of federal regulation is sufficiently comprehensive to make [a] reasonable . . . inference that Congress left no room for supplementary state regulation. [Citation.] [] [C]ourts are reluctant to infer preemption, and it is the burden of the party claiming that Congress intended to preempt state law to prove it. [Citations.] (Viva! Internat. Voice for Animals v. Adidas Promotional Retail Operations, Inc. (2007) 41 Cal.4th 929, 936.) Cahuilla does not identify which type of preemption is applicable to the instant case; however, from our review of the Indian Gaming Regulatory Act (IGRA) and related cases, we infer that Cahuilla is asserting a theory of field preemption, because the IGRA provides a comprehensive scheme for regulating gaming on Indian lands. [Citation.] It establishes federal gaming standards and leaves the states without a significant role unless one is negotiated through a tribal-state compact. [Citations.] (American Vantage Companies v. TableMountain Rancheria (2002) 103 Cal.App.4th 590, 595.) Based on its text and structure, legislative history and jurisdictional framework, the IGRA has been construed as having the requisite extraordinary preemptive force necessary to satisfy the complete preemption exception to the well-pleaded complaint rule. [Citation.] Thus, claims that fall within the preemptive scope of the IGRA, i.e., those that concern the regulation of Indian gaming activities, are considered to be federal questions. [] However, not every contract between a tribe and a non-Indian contractor is subject to the IGRA. [Citations.] Rather, IGRA regulation of contracts is limited to management contracts and collateral agreements to management contracts. [Citation.] (Id. at p. 596.)

Cahuilla contends that the lease agreement is an unapproved management contract and therefore is void; however, as noted ante, Cahuilla relies solely on an opinion letter from the NIGC to support the proposition that the lease agreement is an unapproved management agreement. We concluded ante, that the opinion letter is not entitled to our deference. Nevertheless, if we were to examine the lease agreement, there would be two possible outcomes: (1) the lease agreement is an unapproved management agreement and is void, as contended by Cahuilla; or (2) the lease agreement is not a management agreement. Both possible outcomes lead to the same resultthe contract is not subject to IRGA regulation, because it is not a valid management agreement. Accordingly, the IGRA does not preempt the trial courts authority to issue the assignment order. (American Vantage Companies v. Table Mountain Rancheria, supra,103 Cal.App.4th at pp. 596-597.)

Cahuilla contends that the trial courts authority to issue the assignment order is preempted by the IGRA, specifically title 25 United States Code section 2710, subdivision (b)(2)(B), which requires that the NIGC chairman approve any tribal resolution concerning the regulation of class II gaming on Indian lands, provided that the net revenues from the gaming activity are only used for (1) funding tribal government operations; (2) providing for the general welfare of the tribe; (3) promoting tribal economic development; (4) donating to charitable organizations; or (5) funding the operation of local government agencies. (25 U.S.C. 2710(b)(2)(B).) Cahuilla also contends that its RAP preempts the trial courts authority to issue the assignment order. Cahuillas RAP provides that 49 percent of Cahuillas net gaming revenues shall be distributed into the same five categories listed ante, and that 51 percent shall be distributed in per capita payments to the tribal members.

Class II gaming includes bingo and card games, but excludes baccarat, blackjack, and electronic or slot machine versions of card games, which are all considered class III games. (25 U.S.C. 2703(7)(A) & (B) & (8).)

Cahuilla argues that title 25 United States Code section 2710 operates to preempt the trial courts authority because the lease agreement did not authorize a damage award to be paid from the net gaming revenues that are apportioned for the tribal members per capita payments. Cahuilla contends that it would be in violation of its approved RAP if it were to comply with the trial courts assignment order by paying Scott $31,101 per month, because the casinos net revenue distribution to Cahuillas governmental body is approximately $28,000 per month. Cahuilla asserts that if 100 percent of its casino revenues are used to pay Scott, then the congressional purpose for enacting the IGRA, i.e., to support tribal nations, would be defeated.

We find Cahuillas argument unpersuasive for two reasons. First, it is unclear how using revenue to pay a judgment creditor does not support the tribal nation. Essentially, the revenue is being used to pay a bill of the tribal nation, and therefore the tribal nation is supported by the revenue. Consequently, we conclude that the assignment order does not conflict with Congresss intent of granting Indian nations a means of financial support. Second, title 25 United States Code section 2710 concerns the obligation of the NIGC chairman to approve certain tribal resolutions if particular conditions are met. Title 25 United States Code section 2710 does not limit damage awards, and it authorizes gaming revenues to be used for tribal government operations and tribal economic development. Cahuilla has failed to demonstrate how paying a judgment creditor does not support the operation of the tribal government and the tribes economic development. Accordingly, we do not agree that the assignment order is contrary to federal law or Cahuillas RAP.^[6]

D. Attorneys Fees

Scott contends that it is entitled to an award of appellate attorneys fees, per the lease agreement. Scott requests that this court award appellate attorneys fees, in an amount to be determined by the trial court. We agree with Scotts contention.

Generally, when a judgment is rendered in a case involving a contract that includes an attorney fees and costs provision, the judgment extinguishes all further contractual rights, including the contractual attorney fees clause. [Citation.] Thus in the absence of express statutory authorization, . . . postjudgment attorney fees cannot be recovered. [Citation.] However, [f]ees authorized by statute do not present the same problem. A judgment does not act as a merger and a bar to statutory fees. [Citation.] [Citation.] [] Section 685.040 is intended to address the problem unique to a claim for postjudgment fees in actions based on contract. [Citation.] (Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 934.)

Section 685.040 provides: The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. . . . Attorneys fees incurred in enforcing a judgment are included as [collectible] costs . . . if the underlying judgment includes an award of attorneys fees to the judgment creditor pursuant to a contract.

The lease agreement provides: The prevailing party shall be entitled to recover as part of the award all such advanced costs and reasonable attorneys fees and related costs, including expert witness fees and costs, and any other reasonable costs, fees or expenses of the Arbitration.^[7]

The arbitrator awarded Scott $150,000 in attorneys fees and $24,500 in costs. The trial court confirmed the arbitrators award of attorneys fees and costs. This court affirmed the trial courts confirmation, and awarded Scott appellate attorneys fees for the prior appeal. Consequently, because the underlying judgment includes an award of attorneys fees pursuant to the lease agreement, we conclude that Scott is entitled to attorneys fees for this appeal, in an amount to be determined by the trial court.

DISPOSITION

The judgment is affirmed. Scott is awarded its costs on appeal, and may also file an appropriate motion in the trial court seeking a determination of the amount of appellate attorneys fees to which it is entitled.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

/s/ MILLER

J.

We concur:

/s/ HOLLENHORST

Acting P. J.

/s/ GAUT

J.

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^[1] All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.

^[2] An assignment order directs a judgment debtor to assign to the judgment creditor all or part of the judgment debtors right to a payment due or right to a payment that will become due. ( 708.510, subd. (a).)

^[3] The NGIC opined that the lease agreement was void from inception because (1) it was a management agreement, which required NIGCs approval; and (2) it conferred upon Scott an impermissible proprietary interest in the casino.

^[4] Scott contends that Cahuilla is collaterally estopped from arguing that the trial court lacked jurisdiction to issue the assignment order due to the lease being unenforceable, because, in the prior appeal (case No. E043500, at p. 14), this court held that equitable considerations support the conclusion that enforcement of the contract is proper. We choose to address the merits of Cahuillas contention, because the issue is easily resolved.

^[5] The term [m]anagement contract means any contract, subcontract, or collateral agreement between an Indian tribe and a contractor or between a contractor and a subcontractor if such contract or agreement provides for the management of all or part of a gaming operation. (25 C.F.R. 502.15.)

^[6] In a separate motion filed with this court on June 16, 2009, Cahuilla requested that this court take judicial notice of a letter from the NIGC dated May 11, 2009. (Evid. Code, 452.) In the letter, the acting general counsel for the NIGC expressed uncertainty regarding (1) whether a tribe may use gaming revenue to pay a judgment creditor, and (2) whether Cahuilla would have the funding to regulate its gaming activities, if it complied with the assignment order. The letter concludes by requesting that Cahuilla inform the NIGC how it intends to reconcile the order with IGRA, NIGC regulations, and its gaming ordinance. We note that the NIGC letter is dated May 11, 2009, and it appears to be written in response to the trial courts December 8, 2008, assignment order. The letter was not available to the trial court, and it does not support Cahuillas position that the lease agreement was a management contract. Accordingly, it is unclear how the letter supports Cahuillas case. Therefore, we deny the request for judicial notice.

On August 27, 2009, Cahuilla also moved this court to take judicial notice of (1) the Tribal-State Compact Between the State of California and the Cahuilla Band of Mission Indians, and (2) a letter from the NIGC Acting General Counsel dated June 13, 2007. The June 13, 2007, NIGC letter is already included in the Appellants Appendix, and therefore, we deny that request for judicial notice. The State Compact is not necessary for our review of the preemption issue, and therefore, we deny that request for judicial notice. (See generally Big Valley Band of Pomo Indians v. Superior Court (2005) 133 Cal.App.4th 1185, 1191-1192 [discussing taking judicial notice of tribal documents].)

^[7] The lease agreement also provided that the award of the arbitrator would be final and binding upon the parties, not subject to appeal or review by any court.