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United States v. Rose

filed: September 8, 1994.


Appeal from the United States District Court for the Central District of California. D.C. No. CV-84-6612-LEW. Laughlin E. Waters, District Judge, Presiding.

Before: Myron H. Bright,*fn* Charles Wiggins, and Thomas G. Nelson, Circuit Judges. Opinion by Judge Wiggins.

Author: Wiggins

WIGGINS, Circuit Judge:

Appellant Frank Rose appeals the imposition of a $25,000 fine for violations of a bingo ordinance enacted by the Morongo Band of Mission Indians (the "Band"). The case is on its second visit to this court. In the first sojourn, we held that a suit to enforce the tribal ordinance against a non-Indian presented a federal question of the Band's "disputed ability, under the principles of federal common law, to apply that power against one outside of its community." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1077 (9th Cir. 1990) (hereinafter " Morongo I "); see also Chilkat Indian Village v. Johnson, 870 F.2d 1469 (9th Cir. 1989). This appeal involves that very same dispute of tribal authority, among other issues.

I. Facts and Prior Proceedings

Though the basic facts are accurately recited in Morongo I, we repeat them here with some additional details relevant to this appeal.

In April of 1983, Appellee Morongo Band of Mission Indians ("Appellee" or the "Band") adopted an ordinance regulating the playing of bingo and establishing the Morongo Tribal Bingo Enterprise. At the same time, the Band entered into a lease with Clive "Sonny" Miller ("Miller"), a member of the Band, to use for the games a building located on allocated trust land belonging to Miller. The Band also entered into a management agreement with Justus Enterprises, Inc. ("Justus") whereby Justus would operate the games and manage the enterprise in return for 49 percent of the operating profits, and 95% of the profits after the Band's share exceeded half a million dollars. The Band approved the three documents by a bare majority vote. The Band's attorney forwarded the Management Agreement and Lease to the Bureau of Indian Affairs ("BIA") for approval "if possible."

Concurrently, Miller and Justus executed a Joint Venture Agreement, which directed that, in the event of termination of the agreement by Miller for breach by Justus, "Owner [Miller] will retain all sums accrued or paid to him to that date and Manager [Justus] will assign to Owner all of its rights under the management agreement to be entered into by Manager and Band. . . ."

Days later, the Band, having undergone a change in leadership, began to reconsider its Bingo Enterprise. A new attorney requested that the BIA withhold approval of the contracts so that the Band could try to get more favorable terms. The Band seemed concerned with the amount being paid to Miller. On January 17, 1984, the Band's attorney informed Justus' attorney that the Band had decided to terminate the existing bingo operation and that, while it would consider new proposals from Justus, it would not consider any arrangement involving the lease of Miller's land. The Band rescinded the Management Agreement on the grounds that it was procured through misrepresentation, that it was void because it had not been approved by the BIA, and that Justus had breached the Agreement by failing to make an accounting and make payment for the first fiscal year of operation. Justus paid amounts payable to Miller into the district court as part of an interpleader action. The Bingo Enterprise was to be terminated on February 10, 1984.

Miller, however, believed that his lease with the Band was still valid and that he had succeeded to Justus' rights under the Management Agreement by the terms of their Joint Venture Agreement. He decided to continue holding bingo games on his property, turning to Rose, an experienced bingo advisor, for help in running the games. Rose was a consultant and had no ownership or equity interest in Miller's bingo operation.

On September 5, 1984, the Band filed the current action against Miller and Rose in the district court, seeking both to enjoin the bingo operation and to collect penalties of $500 for each violation of its bingo ordinance. See Ordinance Par. 5(b), ER 50. The bingo operation was seized by United States Marshalls.

The district court first dismissed the entire action for lack of jurisdiction, and the Band appealed. While the appeal was pending, the Band stipulated to the dismissal of the appeal as to Miller. The district court's original dismissal of the claim against Rose for lack of subject matter jurisdiction was reversed by Morongo I. On remand, Rose moved to dismiss the complaint for failure to join Miller as an indispensable party and for failure to state a claim upon which relief could be granted. The district court denied that motion.

The district court granted summary judgment to the Band as to liability. A two-day trial was held to determine the extent of Rose's liability. The court determined that Rose should be liable for one-fourth of the penalties under the ordinance. Final judgment in the amount of $25,000 against Rose was entered on August 14, 1992. Rose appeals, arguing (1) that the contracts provide a defense to the enforcement of the ordinance, (2) that the Band did not have the authority to enforce ...

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