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Maxa v. Yakima Petroleum Inc.

October 10, 1996


Appeal from Superior Court of Yakima County. Docket No: 94-2-01280-9. Date filed: 09/28/94. Judge signing: Hon. Stephen Brown.

Petition for Review Denied April 2, 1997,

Authored by John A. Schultheis, J. Concurring: Dennis J. Sweeney, C.j., Ray E. Munson, J.

The opinion of the court was delivered by: Schultheis

SCHULTHEIS, J. Larry Maxa, a non-Indian, entered into employment agreements and promissory notes with Yakama Indian Nation corporation Yakima Petroleum, Inc. (Petroleum). Each of these contracts was negotiated outside the Yakama reservation. We are asked whether the Yakima County District Court erred in deferring to the Yakama Nation Tribal Court the initial jurisdictional Disposition of Mr. Maxa's suit on these contracts.

We reverse and remand.

In early 1992, Mr. Maxa met with Robert Ramsey, Yakama tribe member and owner of Petroleum, to discuss the creation of a fuel delivery company.

Meeting in Boise, Idaho, the two discussed a means to avoid taxes whereby Mr. Maxa would pick up petroleum products outside Washington and deliver them to Indian owned businesses on the reservation. Mr. Ramsey owned Eagle Stop and Save (Eagle), a convenience store and gas station on the reservation, and was authorized by a Yakama Tribal Council resolution to sell tax-exempt fuel to tribe members. Mr. Maxa agreed to lease a fuel tank trailer and to deliver the fuel under the business name Yakima Petroleum, Inc. Mr. Ramsey agreed to reimburse the start-up costs.

Mr. Maxa and Mr. Ramsey found a suitable tank trailer in Portland, Oregon, leased it and reached an employment agreement there. Since Petroleum could not raise the start-up funds, Mr. Maxa paid the necessary expenses and accepted two promissory notes from the company to cover. The notes were executed in Mr. Ramsey's off-reservation business office at Chinook Tower in Yakima, where he ran Executive Business Consulting, a company that advised various reservations on business operations. He kept Petroleum's business records at the same site. Although some business cards, forms and letterhead gave the Eagle address for Petroleum, others gave the Yakima address. Chinook Tower also displayed a sign advertising Petroleum.

Mr. Maxa worked under the terms of his first employment agreement from October 1992 until January 1993, when a second agreement went into effect. During his employment, he kept the tank trailer parked at Eagle, on the reservation, when he was not traveling; he lived off reservation and kept his business records at home. Most of his working time was spent off reservation, picking up petroleum products out of state and driving them to the reservation. He was not responsible for billing or payments, which were handled at the Yakima address.

At some point, Mr. Maxa quit Petroleum and filed suit in the Yakima County District Court to recover on a total of five contracts, including the notes and employment agreements. In June 1994, the district court deferred the matter to the Yakama Nation Tribal Court to determine whether the tribal court had jurisdiction over the parties and subject matter of the action. Mr. Maxa's motion for reconsideration was denied and the superior court affirmed on appeal. This court accepted discretionary review. RAP 2.3(d)(3).

The issue is whether the trial court erred in referring this action to the tribal court. In referring the jurisdictional issue first to the tribal court, the trial court did not decline jurisdiction, but felt it was bound by federal case law to require exhaustion of remedies in the tribal court system. We disagree.

First, the district court's reliance on National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 105 S. Ct. 2447, 85 L. Ed. 2d 818 (1985) and Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. 9, 107 S. Ct. 971, 94 L. Ed. 2d 10 (1987) is misplaced. Both cases involve federal jurisdiction issues. Applying principles of comity, both mandate that federal courts abstain or dismiss when tribal courts assert civil jurisdiction. Iowa Mutual, 480 U.S. at 15; National Farmers Union, 471 U.S. at 857. State civil adjudicatory authority over litigation involving tribe members, on the other hand, is not specifically preempted by federal law. California v. Cabazon Band of Mission Indians, 480 U.S. 202, 208, 107 S. Ct. 1083, 94 L. Ed. 2d 244 (1987). See also Thomsen v. King County, 39 Wash. App. 505, 512, 694 P.2d 40 (state civil jurisdiction over non-Indians on reservation land), review denied, 103 Wash. 2d 1030 (1985).

Second, the facts here do not support a finding that the cause of action arose on the reservation or that it affects reservation affairs.

Both state jurisdiction over Indians and tribal jurisdiction over nonmembers are limited. Pursuant to the authority granted by the act of August 15, 1953 (Public Law 280, 83rd Congress, 1st Session), the Washington Legislature adopted RCW 37.12, which provides state civil and criminal jurisdiction over Indians on reservations only in certain circumstances *fn1 or when a tribe has requested subjection to full state jurisdiction. RCW 37.12.010; .021. The Yakama Indian Nation has never requested state assumption of jurisdiction. State v. Sohappy, 110 Wash. 2d 907, 909, 757 P.2d 509 (1988). Tribal court jurisdiction over nonmembers on reservations is limited to (1) consensual relationships with tribe members, such as in contracts, or (2) nonmember conduct that threatens or affects the "political integrity, the economic security, or the health or welfare of the tribe." Montana v. United States, 450 U.S. 544, 566, 101 ...

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