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Clements v. Confederated Tribes of Colville Reservation

United States District Court, E.D. Washington

November 15, 2019



          ROSANNA MALOUF PETERSON United States District Judge

         BEFORE THE COURT is a Motion to Dismiss, ECF No. 8, by Defendants the Confederated Tribes of the Colville Reservation (“the Tribes”) and the Court of the Confederated Tribes of the Colville Reservation (“the Tribal Court”). Defendants seek dismissal for lack of subject matter jurisdiction under Fed.R.Civ.P. Rule 12(b)(1), and for failure to state a claim under Fed.R.Civ.P. 12(b)(6). The Court has reviewed the Complaint, the parties' submissions, and the relevant law. The Court further heard oral argument on the motion on November 14, 2019, in Spokane. Accordingly, the Court is fully informed and grants the motion.


         Plaintiff James Clements formed South Bay Excavating, Inc. (“South Bay”) in 1987. ECF No. 1 at 3. The Olympia, Washington, company provided excavation services. Id. Jason Clements became a shareholder and an officer of South Bay in 2006.[1]

         In November 2016, Defendant the Tribes entered into a “Contract for Repair and/or Construction Services” with South Bay to complete the “CTCR 12 Fiber Projects” for the Tribes (“the Contract”). ECF No. 9-1. Jason signed the Contract for South Bay as Vice President of the company. ECF No. 9-1 at 17. The Contract was executed in Nespelem, Washington, where the Tribes are headquartered, and provided for South Bay's installation of optical fiber cable for $2, 457, 194, with payments remitted to South Bay on a detailed schedule and a scheduled completion date of October 31, 2017. ECF No. 9-1 at 1, 5, 16. The Contract obliged South Bay, as the “Contractor, ” to “be solely responsible for all construction under this Contract, including the techniques, sequences, procedures, and means for coordination of all work.” Id. at 9. The Contract further provided for the “Tribal Courts of the Colville Confederated Tribes” to have “sole and exclusive jurisdiction over disputes arising from the Contract.” ECF No. 9-1 at 14.

         Following execution of the Contract, the Tribes allegedly paid South Bay for work pursuant to the Contract. ECF No. 9-2 at 7. The Tribes allege that South Bay “walked off of the job” on approximately June 1, 2017, without notice and without any indication of how it would complete the project. ECF No. 9-3 at 2; see also ECF No. 9-2 at 7 (alleging that work ceased on June 2, 2017). In a letter dated June 22, 2017, the South Sound Bank, out of Olympia, Washington, notified the Tribes that the bank was exercising its “rights to collect any amounts” that the Tribes owed to South Bay, “until further notice.” ECF No. 9-4 at 2.

         On July 6, 2017, Liquid Networks, Inc. (“Liquid Networks”) was registered as a Washington corporation. ECF No. 9-5 at 2. By letter dated July 7, 2017, a law firm representing Liquid Networks informed the Tribes that Liquid Networks had been assigned the Contract from South Bay. ECF No. 9-6 at 2. The letter further stated that Liquid Networks intended “to resume work on the project on or around July 10th and will adhere to the same terms and conditions for the ‘CTCR 12 Fiber Projects' Contract.” Id. On July 11, 2017, James, for assignor South Bay, and Jason, for assignee Liquid Networks, signed an Assignment of Contract in which Liquid Networks allegedly assumed South Bay's rights, duties, and obligations under the Contract with the Tribes. ECF No. 9-7 at 2. In Defendants' instant motion they allege that the “creation of Liquid Networks and assignment of the Contract appear to have been done solely to evade collections efforts by South Sound Bank.” ECF No. 9 at 4.

         On approximately August 28, 2017, the Tribes addressed a letter to James, as President of South Bay, seeking return of approximately $385, 000 that the Tribes allegedly had paid South Bay toward work that South Bay had not performed and payment of $25, 000 in allegedly outstanding fees owed to the Tribal Employment Rights Office (“TERO”). ECF No. 9-3 at 2.

         The Tribes filed a Civil Complaint with the Tribal Court on January 5, 2018. ECF No. 9-2 at 4-79. The Tribes named South Bay, Liquid Networks, and the Clements as defendants. Id. The Clements moved to dismiss the Tribes' claims against them individually for lack of personal and subject matter jurisdiction. ECF No. 1 at 5. The Tribal Court denied the motion on May 17, 2018, finding that the “issue of whether James and Jason Clements are personally liable for allegedly breaching the contract is necessarily a dispute ‘arising from' the contract” and dismissal would not be appropriate “until the Tribes have presented their case at trial.” ECF No. 9-8 at 6-7.

         The Clements sought interlocutory appeal of the Tribal Court's denial of the motion to dismiss. ECF No. 9-9 at 3. On March 19, 2019, the Colville Tribal Court of Appeals found that the question of whether the tribal courts should “pierce the corporate veil” and find personal jurisdiction over the Clements individually was “not ripe for interlocutory appeal” and remained a “matter for the fact-finder at the trial level.” ECF No. 9-9 at 3.

         Plaintiffs filed their Complaint in this Court on June 5, 2019, alleging that Plaintiffs had exhausted their tribal court remedies. ECF No. 1 at 2. Plaintiffs seek relief, allegedly as “interested parties” within the meaning of 28 U.S.C. § 2201, in the form of a declaratory judgment that the tribal court lacks jurisdiction over Plaintiffs and an injunction prohibiting the tribal court from adjudicating the claims brought against the Plaintiffs by the Tribes. Id. at 2, 5-8. Furthermore, Plaintiffs assert subject matter jurisdiction under 28 U.S.C. § 1331. Id. at 3.


         Fed. R. Civ. P. 12(b)(1)

         “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A court will dismiss a complaint under Fed.R.Civ.P. 12(b)(1) upon finding that the court lacks jurisdiction over the subject matter of the suit. As a general rule, a court may dismiss a complaint sua sponte upon finding that it lacks subject matter jurisdiction. See Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015). However, due to the “quasi jurisdictional nature” of sovereign immunity, a defendant may waive a challenge to jurisdiction on that ground “if it does not invoke its immunity in a timely fashion and takes actions indicating consent to the litigation.” Pistor, 791 F.3d at 1111. “Once challenged, the party ...

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