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Outsource Servs. Mgmt., LLC v. Nooksack Bus. Corp.

Supreme Court of Washington, En Banc

August 21, 2014

Outsource Services Management, LLC, Respondent ,
v.
Nooksack Business Corporation, Petitioner

Argued February 13, 2014

Appeal from Whatcom County Superior Court. 11-2-00523-9. Honorable Steven J. Mura.

Connie Sue M. Martin and Averil B. Rothrock (of Schwabe Williamson & Wyatt PC ), for petitioner.

David S. Keenan and Robert M. McKenna (of Orrick Herrington & Sutcliffe ) ( Michael M. Krauss and Jerome A. Miranowski, of counsel), for respondent.

AUTHOR: Justice Susan Owens. WE CONCUR: Chief Justice Barbara A. Madsen, Justice Charles W. Johnson, Justice Mary E. Fairhurst, Justice Debra L. Stephens, Justice Charles K. Wiggins, Lisa R. Worswick, Justice Pro Tem. AUTHOR: Justice Sheryl Gordon McCloud. WE CONCUR: Justice Steven C. Gonzá lez.

OPINION

Page 381

Owens, J.

[181 Wn.2d 274] ¶ 1 Washington State courts have jurisdiction over civil cases arising on Indian reservations as long as it does not infringe on the sovereignty of the tribe. At issue in this case is whether Washington State courts have jurisdiction over a civil case arising out of a contract in which the tribal corporation waived its sovereign immunity and consented to jurisdiction in Washington State courts. We hold that it does not infringe on the sovereignty of the tribe to honor its own corporation's decision to enter into a contract providing for jurisdiction in Washington State courts.

FACTS

¶ 2 Nooksack Business Corporation (Nooksack), a tribal enterprise of the Nooksack Indian Tribe, [1] signed a contract with Outsource Services Management LLC to finance the renovation and expansion of its casino. The contract contained the following clause related to sovereign immunity and jurisdiction:

Limited Waiver of Sovereign Immunity; Waiver of Rights in Tribal Court. Subject to the limitations on recourse in Section 8.30, the Borrower hereby expressly grants to the Lender and all Persons entitled to benefit from any Loan Document an irrevocable limited waiver of its sovereign immunity from suit or legal process with respect to any Claim. In furtherance of this waiver, the Borrower hereby consents with respect to any Claim: (A) to arbitration in accordance with the provisions of Section 8.27, and (B) to be sued in (i) the United States District Court for Western District of Washington (and all federal courts [181 Wn.2d 275] to which decisions of the United States District Court for the Western District of Washington may be appealed), (ii) any court of general jurisdiction in the State (including all courts of the State to which decisions of such courts may be appealed), and (iii) only if none of the foregoing courts shall have jurisdiction, or only to permit the compelling of arbitration in accordance with Section 8.27, or the enforcement of any judgment, decree or award of any foregoing court or any arbitration permitted by Section 8.27, all tribal courts and dispute resolution processes of the Tribe. The Borrower hereby expressly and irrevocably waives any application of the exhaustion of tribal remedies or abstention doctrine and any other law, rule, regulation or interpretation that might otherwise require, as a matter of law or comity, that resolution of a Claim be heard first in a tribal court or any other dispute resolution process of the Tribe.

Clerk's Papers (CP) at 446 (emphasis added).

¶ 3 Nooksack failed to make a payment due on the loan. Outsource and Nooksack executed three successive forbearance agreements, but after Nooksack failed to make required payments, Outsource filed suit in Whatcom County Superior Court for breach of the loan agreement. Nooksack acknowledged that it had waived sovereign immunity but argued that nonetheless, Whatcom County Superior Court did not have subject matter jurisdiction over the case because it involved a contractual dispute with a tribal enterprise that occurred on tribal land.

¶ 4 The trial court denied Nooksack's motion to dismiss, ruling that it had subject matter jurisdiction because Nooksack both waived sovereign immunity and consented to the jurisdiction of Washington State courts. The trial court also certified its order for interlocutory appeal. Nooksack appealed, and the Court of Appeals found that review of the jurisdictional issue was justified under RAP 2.3(b)(4). The Court of Appeals issued a broader holding than the trial court, concluding that the waiver of sovereign immunity alone was sufficient to give the superior

Page 382

court subject matter jurisdiction in the case. Outsource Servs. Mgmt., LLC v. Nooksack Bus. Corp., 172 Wn.App. 799, 814-15, [181 Wn.2d 276] 292 P.3d 147 (2013). Nooksack petitioned for our review, which we granted. Outsource Servs. Mgmt., LLC v. Nooksack Bus. Corp., 177 Wn.2d 1019, 304 P.3d 115 (2013).

ISSUE

¶ 5 Does a Washington superior court have subject matter jurisdiction over this contract claim when Nooksack both waived sovereign immunity and consented to state court jurisdiction?

ANALYSIS

¶ 6 Nooksack contends that the superior court does not have jurisdiction over this claim because it arose out of a contractual dispute with a tribal enterprise that occurred on tribal land. Whether a court has subject matter jurisdiction is a question of law, and thus we review it de novo. Joy v. Kaiser Alum. & Chem. Corp., 62 Wn.App. 909, 911, 816 P.2d 90 (1991) (citing Hoffer v. State, 110 Wn.2d 415, 420, 755 P.2d 781 (1988)).

¶ 7 There are very few limitations on the subject matter jurisdiction of superior courts in Washington. Pursuant to the Washington State Constitution, superior courts " have original jurisdiction in all cases and of all proceedings in which jurisdiction shall not have been by law vested exclusively in some other court." Wash. Const. art. IV, § 6. This original jurisdiction includes contract claims, the subject matter of the dispute in this case.

¶ 8 However, the state has limited jurisdiction over civil disputes involving Indians that arise on Indian reservations. See Powell v. Farris, 94 Wn.2d 782, 784-85, 620 P.2d 525 (1980) (holding that the state " may exercise some jurisdiction over some reservation conduct" ). Washington State courts generally have jurisdiction over civil disputes in Indian country if either (1) the state has assumed [181 Wn.2d 277] jurisdiction pursuant to Public Law 280 [2] or (2) asserting jurisdiction would not infringe on the rights of the tribe to make its own laws and be ruled by them. Id. at 784-87.

¶ 9 Importantly, both sides agree that this dispute does not fall within the scope of the civil jurisdiction that Washington assumed pursuant to Public Law 280. Thus, the question is whether asserting jurisdiction in this case would infringe on the rights of the tribe. As described below, we do not see how asserting jurisdiction in this case would infringe on the tribe's right to self-rule when its own tribal enterprise ...


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