Federal Court of Appeals Holds that an IRA-Chartered Tribal Insurance Corporation Is Entitled to Sovereign Immunity in another Tribe's Court

The U.S. Court of Appeals for the Eighth Circuit has held that a tribal business corporation chartered under Section 477 of the Indian Reorganization Act (named “Amerind”), set up by three Indian tribes, and servicing a fourth tribe, is entitled to sovereign immunity in the fourth tribe’s tribal court. Amerind v. Malaterre, No. 08-3949 (8th Cir. Feb. 15, 2011). Specifically, the Court held that the Turtle Mountain Tribal Court did not have jurisdiction over a direct tort suit against Amerind, brought by three Turtle Mountain Tribal members, because it is an arm of the chartering tribes who created it, and the plaintiffs failed to show that Amerind expressly waived such immunity. Amerind’s business was to provide housing insurance.

Plaintiffs in the case are three enrolled members of the Turtle Mountain Tribe who sued the Turtle Mountain Housing Authority (TMHA) and Amarind, after a 2002 fire destroyed a house on the Turtle Mountain Indian Reservation.

Amerind argued that it was entitled to sovereign immunity and that Plaintiffs’ action could not proceed directly against Amerind because Plaintiffs were not parties to a previous tribal insurance company contract with TMHA, whose obligations and liabilities had been taken over by Amerind. The Tribal Court held Amerind was not entitled to sovereign immunity because it did not stand in the same position as TMHA or the Tribe. Amerind appealed to the Turtle Mountain Tribal Court of Appeals which affirmed.

Amerind then commenced a new lawsuit in the Federal District Court, claiming that the Turtle Mountain Tribal Court exceeded its jurisdiction by exercising authority over Amerind, a nonmember of the Turtle Mountain Tribe, under Montana v. United States, 450 U.S. 544, 565 (1981). The District Court held that the Tribal Court had jurisdiction over Amerind because the previous insurance company had entered into a consensual contractual relationship with TMHA to insure TMHA against personal injury and property loss. Amerind appealed the District Court decision to the Eighth Circuit Court of Appeals.

The Eighth Circuit held that Amerind serves as an arm of the three chartering tribes and not as a mere business, and thus is entitled to tribal sovereign immunity. The Court reasoned that while Amerind is not a tribe itself, it was undisputed that a tribe’s sovereign immunity may extend to tribal agencies. The Court cited several cases where courts have recognized that a § 477 corporation is entitled to tribal sovereign immunity, noting that the language of § 477 itself called the entity an “incorporated tribe” which suggests that the entity is an arm of the tribe, and thus is entitled to sovereign immunity.

Finding that Amerind shared the tribal immunity of the three chartering tribes, the court next addressed the question of whether Amerind’s immunity had been waived. The Court noted that it was the Plaintiffs’ burden to prove that Amerind had expressly and unequivocally waived tribal sovereign immunity. The Court held that neither the parties’ lack of argument on the immunity issue before the District Court, nor the general assumption by Amerind of the previous insurance company’s obligations and liabilities constituted an express waiver of Amerind’s sovereign immunity. Instead, the Court determined that Amerind’s general assumption of the previous insurance company’s obligations and liabilities was, at most, an implied waiver of sovereign immunity, which is not enough. The Court noted that Amerind’s corporate charter provided that Amerind may “sue and be sued in the Corporation’s name in courts of competent jurisdiction within the United States, but only to the extent provided in and subject to the limitations stated in Article 16 of this Charter.” Article 16 provided, in part, that any waiver of tribal immunity by Amerind must be in the form of a resolution adopted by the Board of Directors. The Court determined that absent such a resolution, there was no unequivocal waiver of sovereign immunity. Thus, the Court held that the Tribal Court does not have jurisdiction over the Plaintiffs’ direct suit against Amerind because Amerind is entitled to tribal immunity and the Plaintiffs failed to meet their burden of showing that Amerind waived such immunity.

In a concurring opinion, one of the three judges noted that another Federal Appeals Court had concluded that courts should consider tribal court jurisdiction under the Montana rule before reaching the issue of sovereign immunity and if that was correct, he would hold that the Tribal Court did not have jurisdiction over the Plaintiffs’ underlying tort action under Montana.

Finally, the dissenting judge called the decision perverse, stating that the decision “may require the Supreme Court to re-examine the ‘wisdom of perpetuating the doctrine [of tribal immunity].'” He believed that Amerind waived its immunity in the contract between itself and TMHA. He also stated that the result in this case was perverse because as a condition of receiving federal funds, Congress mandated that tribes and tribal housing authorities be required to purchase insurance, and as a practical matter, requiring the purchase of insurance is perhaps the “consummate indication Congress intended tribes and tribal housing authorities would be subject to suit.” He stated that “[w]here, as here, the already infirm concept of tribal immunity is extended so far as to shield a corporate entity whose very existence is at odds with the concept of immunity, it seems perhaps the time is now upon us to abrogate the doctrine.”

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