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The Gamble of Working with Indian Tribes

By April 16, 2013October 24th, 2018Construction Litigation Blog, Patty League
Patty League

Patty League

The largest gaming club in the state of California is the Pechanga Resort and Casino in Temecula, with more than 3,000 slot machines and approximately 200,000 square feet of gaming space.  Other famous gaming operations in California include the Morongo Casino, Resort & Spa, and the Chumash Casino Resort.  These noted casinos are owned by Indian Tribes.  Material suppliers, subs and direct contractors hired to work on these various developments or any other construction project on ancestral land need to be careful and cognizant of their rights should they not be paid for the supplies furnished or work performed.  Laws pertaining to Indian Tribes in the construction industry can be very complex.  In short, with only a few exceptions, contractors don’t really have any rights with regard to mechanics liens.  Tribal land is not considered state land, and therefore, is not subject to the state’s mechanics lien laws. 

The right for Indian Tribes to create and be governed by their own laws is referred to as Indian Sovereign Authority.  This independent immunity is just that – immunity from state and federal government laws.  Additionally, state and federal courts have no jurisdiction over Indian Tribes.  The only way these courts could exercise jurisdiction would be if a waiver of immunity were executed.  And even then, the appropriate tribal council authority needs to be provided. 

A recent case, Lobo Gaming, Inc. v. Pit River Tribe of California, is a good example of why contractors should make certain that the authorized council/membership is obtained pertaining to sovereign immunity.  In this case, the tribe borrowed money from Lobo Gaming so that the tribe could construct two casinos on its reservation.  The two parties also entered into a gaming equipment lease.  The equipment lease contained a waiver of sovereign immunity that the Pit River Tribe’s Tribal Council approved; however, the Tribal Membership did not.  Lobo Gaming later sued Pit River Tribe.  The Tribe filed and was granted a motion to quash service based on its sovereign immunity.  Lobo Gaming appealed, and the California Court of Appeal affirmed the trial court’s dismissal. 

Contractors should be extremely meticulous and research the tribe’s ordinances, constitution, bylaws, etc., to determine who or what governing body actually has the authority to execute a waiver of immunity.  Additionally, Native Americans can bring suit but be relieved from cross-claims in the same action.

When bidding on a Tribal construction project, contractors should hire legal counsel to review all contracts prior to signing.