7 NICS App. 9, HOOPA VALLEY TRIBAL COUNCIL v. SHERMAN (March 2005)
IN THE HOOPA VALLEY TRIBAL COURT OF APPEALS
HOOPA VALLEY INDIAN RESERVATION
HOOPA, CALIFORNIA
Hoopa Valley Tribal Council, Appellant,
v.
Duane Sherman, Sr., Appellee.
No. C-01-064/A-03-007 (March 19, 2005)
SYLLABUS*
Tribal Council sought reimbursement from former Tribal Chairman for wages and benefits paid to former Chairman for Chairman’s work on a wild fire. Tribal Council argued that the former Chairman’s work on the wildfire was part of his duties as Chairman and that Tribal code prohibited Chairman from receiving anything more than his salary as Chairman for performing Chairman’s duties. Tribal Council also introduced evidence that former Chairman had falsified time sheets and had been paid for fire-related work during times former Chairman was on travel status performing non-fire-related duties. Tribal Court found that former Chairman in essence had held a second job fighting the fire, that nothing in the Tribal Code prohibited such “moonlighting,” and that in any event, Tribal Council had knowledge of and acquiesced in billing arrangements and was therefore estopped from seeking reimbursement. Tribal Court therefore awarded partial judgment to the Tribe, awarding reimbursement for amount to be determined on proof for time former Chairman was paid from the fire account while not performing fire-related duties, but denying reimbursement to the Tribe for time former Chairman actually worked on the fire. Tribal Council appealed. Court of Appeals, without ruling on question of whether Tribal Code allows “moonlighting” or compensation above the Chairman’s salary, holds that the Tribal Council is estopped from seeking reimbursement and therefore affirms the judgment of the Tribal Court.
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Gary F. Bass, Chief Justice; Martin C Bohl, Justice; R. Richard Fusilier, Justice. |
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OPINION
I. BACKGROUND
Appellee Duane Sherman, Sr., the Defendant in this lawsuit, was the elected Chairman of the Hoopa Valley Tribe during all times that the acts at issue in this lawsuit took place. The Tribe experienced a conflagration, a wild fire called the Megram Fire, during the summer and fall of 1999. The Megram Fire appears to have started in a United States National Forest wilderness area in late August, reached the reservation in mid-October, and was either extinguished or sufficiently contained so as to no longer pose a threat to the reservation at some point in December 1999. Sherman worked on the fire, billed for the time he worked on the fire, and was paid $46,057.87 for work related to the fire in addition to the $80,000 per year statutory salary he received as Tribal Chairman.
Subsequent to the fire, relevant Federal agencies refused to reimburse the Tribe for the time Sherman spent working on the fire. The Tribal Council then sought reimbursement from Sherman, claiming that Sherman’s time spent working on the fire was part of his responsibilities as Tribal Chairman and as such, he was not entitled to compensation above and beyond his salary as Chairman. The Tribal Council also introduced evidence at trial that Sherman received both his salary as Tribal Chairman and compensation for fire suppression duties on certain days when he was on travel status performing his duties as Tribal Chairman. Finally, the Tribal Council sought punitive damages, alleging that Sherman knowingly received the additional pay wrongfully and in breach of his duties as Tribal Chairman.
At trial, the Parties stipulated that the Megram Fire constituted an emergency for any and all purposes concerning this case. The Parties also stipulated that Tribal Personnel Policies, Section 10.4 prohibits overtime for salaried personnel. The Tribal Council presented evidence and witness testimony establishing the payments that Sherman had received over and above his salary as Chairman and describing the legal and procedural constraints on the Chairman’s ability to receive compensation other than his/her salary. Sherman presented witness testimony regarding his own work on the fire, payments made to other salaried personnel who worked on the fire, and the practices and knowledge of members of the Tribal Council and Tribal administration regarding his compensation for work on the fire.
The Tribal Court entered a partial judgment in favor of the Tribal Council. The Tribal Council was awarded reimbursement, to be determined through a subsequent showing of specific damages, in the amount that Sherman was paid through the Tribal Fire Suppression Budget for time Sherman actually spent performing his duties as Chairman while on travel status. However, citing the emergency nature of the Megram Fire and resultant deviations from normal Tribal law and procedure, lack of Tribal law prohibiting “moonlighting;” and the legal theory of estoppel, the Tribal Court refused to enter judgment in favor of the Tribal Council for the balance of the
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payment Sherman received for his work on the fire. Following its consideration of a Request for Reconsideration by the Tribal Council, the Tribal Court reaffirmed its original order. The Tribal Council then filed this appeal.
II. JURISDICTION
The Hoopa Valley Court of Appeals has territorial jurisdiction over this action pursuant to Hoopa Valley Tribal Code 1.1.04(a). The Court has personal and subject matter jurisdiction over this action pursuant to Hoopa Valley Tribal Code 1.1.04 (b).
III. ISSUES PRESENTED
1. Was compensation over and above the Chairman’s salary prohibited as a matter of law?
2. Is the Tribal Council estopped or otherwise barred from seeking reimbursement?
3. Did the trial court improperly consider hearsay evidence?
IV. STANDARD OF REVIEW
A. The Trial Court’s Findings of Fact and Conclusions of Law
An appellate court reviews a trial court’s conclusions of law de novo – that is, a court of appeals reviews the issues of law from the same position as the trial court and owes no deference to the trial court’s interpretation of the relevant laws and procedures. See, e.g., Bugenig v. Hoopa, 5 NICS App. 37, 37 – 38, (Hoopa Valley Tribal Ct. App. 1998.) However, an appellate court’s review of the trial court’s findings of fact is generally subject to the “clearly erroneous” standard – that is, a court of appeals will defer to the trial court’s findings of fact unless the appellate court determines that the trial court’s findings of fact are clearly erroneous. Id., 37 – 38. See also Federal Rule of Civil Procedure 52(a), cited in Pullman-Standard v. Swint, 456 U.S. 273, (1982), cited in turn in Bugenig, at 38. A factual finding by the trial court is not clearly erroneous if there is substantial evidence in the record to support that finding. Cf. Kelsey v. TERO Commission, 5 NICS App. 50, 51 (Hoopa Valley Tribal Ct. App. 1998) (“trial court decision is supported by substantial evidence”), In the Matter of Robertson, 4 NICS App. 111, 117 (Hoopa Valley Tribal Ct. App. 1996) (“[t]here is substantial evidence in the record to support the Trial Judge’s findings”), Hoopa Valley Indian Housing Authority v. Gerstner, 3 NICS App. 250, 263 (Hoopa Valley Tribal Ct. App. 1993) (trial court decision affirmed where “substantial evidence exists to support the trial court”). Such deference is given to the trial court’s factual findings because the trial court has the opportunity not only to hear all of the testimony and other evidence, but also to directly observe and determine the credibility of each witness. Duenas v. Puyallup Tribe, 1 NICS App. 71, 72 (Puyallup Tribal Ct. App. 1990).
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B. Estoppel
Estoppel is “an equitable concept that is invoked by the court in its discretion.” Hoefler v. Babbitt, 139 F.3d 726, 727 (9th Cir. 1988).1 A trial court’s decision whether or not to apply estoppel is therefore reviewed for abuse of discretion. Id. See also Santa Maria v. Pacific Bell, 202 F.3d 1170, 1176 (9th Cir. 2000). A court abuses its discretion if it “fails to apply the correct law or … rests its decision on a clearly erroneous finding of material fact.” Bird v. Lewis & Clark College, 303 F.3d 1015, 1020 (9th Cir. 2002). See also Davis v. Tulalip Tribes, 5 NICS App. 11, 14 (Tulalip Tribal Ct. App. 1997) (“An abuse of discretion does not exist if the findings of the judge are supported by substantial evidence.”)
C. Hearsay
The decision by a trial court to admit or deny hearsay is reviewed for abuse of discretion. Calmat Company v. U.S. Department of Labor, 364 F.3d 1117, 1122 (9th Cir. 2004). It must be determined that the trial court abused its discretion and the error was prejudicial to reverse on the basis of the evidentiary ruling. Id.
V. DISCUSSION
A. Compensation and Estoppel
The Tribal Council argues strenuously that as a matter of Hoopa Valley Tribal law, the Chairman is prohibited from receiving compensation for “overtime” work, holding a second job (i.e. “moonlighting”) or in any manner receiving compensation above and beyond the Chairman’s salary absent a budget modification approved at a duly noticed meeting of the Tribal Council. The Tribal Council notes that the Tribal Court itself found that “Plaintiff’s evidence establishes that [Chairman Sherman’s] compensation from the Tribal Fire Suppression Budget was a deviation from normal policy and procedure.” The Tribal Council expresses great concern that a ruling allowing such compensation in apparent contravention of Tribal law, policy and procedure would set “a dangerous precedent for Tribal Councils across the nation.”
Because this Court finds that the Tribal Court properly exercised its discretion in applying the doctrine of estoppel, this Court need not reach the argument of the Tribal Council or the merits of the Tribal Court ruling concerning the propriety or legality of the manner in which Sherman was compensated. This opinion therefore has no precedential value concerning the issue of whether the Hoopa Valley Tribal Chairman may engage in moonlighting or be compensated in the manner that Mr. Sherman was in this case. Rather, the precedential value of
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this opinion is limited to the Court’s holding regarding the Tribal Court’s discretion to apply the doctrine of estoppel.
The Tribal Council argues that the trial court judge “inappropriately inserted the defense of estoppel into its judgment sua sponte.” We disagree. The record before the Tribal Court clearly reveals that Mr. Sherman himself raised the defense of estoppel.
Estoppel is a bar that prevents one from asserting a claim or right that contradicts what one has said or done before or what has been legally established as true. The same thing said differently is that estoppel is a bar to alleging or denying a fact because of one's own previous actions or words to the contrary.
Sherman presented argument and witness testimony, including his own, supporting his contention that the Tribe’s Chief Financial Officer, Fire Management Officer, Tribal Attorney and members of the Tribal Council agreed in the midst of the Megram fire emergency that various administrative personnel and specifically Sherman himself would bill the Tribal Fire Suppression Budget for their time and that the Tribe would seek reimbursement from third party agencies, like the Bureau of Indian Affairs and the U.S. Forest Service. Sherman argued and presented evidence that the Tribal Council then sat on its potential legal claims for approximately two years until there was a change in the Tribal Administration.
While Mr. Sherman himself may not have invoked the technical legal term “estoppel,” nothing in the Hoopa Valley Tribal Code requires him to do so. HVTC Title III, Rule 68 gives the Tribal Court broad authority to hold pro se litigants such as Mr. Sherman to a lower standard of compliance with legal technicalities than attorneys where doing so is in the interest of substantial justice. Rule 68 specifically gives the Court the discretion to construe documents filed by pro se litigants “in a liberal manner so as to provide for the just determination” of the proceedings. Read in its entirety, Rule 68 similarly allows the Court to liberally construe the arguments and evidence presented by pro se litigants at trial in order to accomplish substantial justice and provide for a just determination of the proceedings. In invoking the legal term “estoppel” in its Judgment, the trial judge did nothing more than apply a legally correct name to the defense which Sherman himself had presented at the trial.
The Tribal Council argues that the Tribal Court failed to establish the elements of estoppel. In support of this argument, the Tribal Council cites Bell Lavalin Inc. v. Simcoe, 61 F.3d 742 (9th Cir. 1995). However, as the Tribal Council itself acknowledges in its brief, Federal case law may only be cited as persuasive argument and is no way controlling in Hoopa Valley Tribal Court. Moreover, the Court of Appeals’ holding regarding estoppel in Bell Lavalin is based entirely on an interpretation and application of Alaska state law, not federal law or even California state law. Finally, the Tribal Council provides an incomplete citation of the elements
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of the defense of estoppel, even as set forth in Bell Lavalin.2 For these reasons, this Court does not find Bell Lavalin controlling in this case.
As discussed above, estoppel is a bar that prevents one from asserting a claim or right that contradicts what one has said or done before (also known as “equitable estoppel”) or what has been legally established as true (also known as “collateral estoppel” or “estoppel by judgment”). The first sentence of a fairly long discussion of estoppel found in Black’s Law Dictionary states that estoppel “means that party is prevented by his own acts from claiming a right to rely on such conduct and has acted accordingly.” Black’s Law Dictionary, Sixth Edition, West Publishing Company, 1990, p. 551. Black’s also discusses “estoppel in pais,” which is
The doctrine by which a person may be precluded by his act or conduct, or silence when it is his duty to speak, from asserting a right which he otherwise would have had. The doctrine rests upon the principle that when a person by his acts causes another to change his condition to his detriment, person performing such acts is precluded from asserting a right he otherwise might have had.
Id. (Citations omitted.) In a separate entry, Black’s defines “equitable estoppel” as “[t]he doctrine by which a person may be precluded by his act or conduct, or silence when it is his duty to speak, from asserting a right which he otherwise would have had.” Id., at 538. (Emphasis added; citations omitted.) “Elements or essentials of estoppel include change of position of parties so that party against whom estoppel is invoked has received a profit or benefit or party invoking estoppel has changed his position to his detriment.” Id., at 551.
Acquiescence and laches are two additional legal terms closely related to estoppel that merit discussion here.
Acquiescence and laches are cognate but not equivalent terms. The former is a submission to, or resting satisfied with, an existing state of things, while laches implies a neglect to do that which a party ought to do for his own benefit or protection. Hence, laches may be evidence of acquiescence. Laches imports a merely passive assent, while acquiescence implies active assent. “Acquiescence” relates to inaction during performance of an act while “laches” relates to delay after an act is done.
Id., at 24. Laches is also defined as
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A failure to do something which should be done or to claim or enforce a right at a proper time. A neglect to do something which one should do, or to seek to enforce a right at a proper time.
Id., at 875.
In the case at bar, the trial judge applied the term “estoppel” to Mr. Sherman’s defense. The judge did so after stating that the “evidence in this case … indicates that Plaintiff Hoopa Valley Tribal Council, along with the Chief Financial Officer and Tribal attorney [sic] … participated in the deviation regarding Defendant’s extra compensation, acquiesced in it, and by so doing ratified it.” (Emphasis added.) This Court finds that there is substantial evidence in the record to support this finding of the Tribal Court. Mr. Sherman testified under oath that the Tribal Council knew of and approved the billing arrangements. Mr. Steve Burbank, the Tribe’s Chief Financial Officer at the time of the fire, testified that both he and the Council were aware of and approved the billing arrangements. Both of these witnesses were available for cross-examination and yet the Tribal Court found that their testimony was unrebutted by Plaintiff. While the one Tribal Council member who testified did not claim specific personal knowledge of the billing arrangements, neither did that Council member disavow that the Council had approved such arrangements. Plaintiff’s cross-examination of this witness failed to establish that the Tribal Council had not acquiesced in the arrangements, and Plaintiff did not call any other Tribal Council members as witnesses who might have presented evidence contesting Mr. Sherman and Mr. Burbank’s testimony. Mr. Sherman also testified under oath that the Tribal Attorney at the time had advised him it would be lawful for him to bill his time for fire-related activities over and above his salary as Chairman. While Plaintiff’s counsel objected to this statement on hearsay grounds, Plaintiff’s Counsel failed to challenge the credibility of the statement on cross-examination despite being advised by the judge that the judge would admit the statement, not for the truth of the matter asserted, but rather as it beared on notice to Mr. Sherman.
Whether we call it “estoppel,” “acquiescence” or “laches,” this Court agrees with the Tribal Court that Mr. Sherman established the elements of an affirmative defense to the Tribal Council’s claim for reimbursement. As discussed above, substantial evidence in the record supports the Tribal Court’s finding that Plaintiff/Appellant Tribal Council acquiesced in the compensation scheme which the Tribal Council now seeks to challenge. Substantial evidence in the record also indicates that Mr. Sherman changed his position to his detriment. Although the Tribal Court did not make an explicit finding on this point, the Court’s Judgment essentially concludes that Mr. Sherman took on a “second job,” which would indeed represent a change of position. Undisputed evidence in the record establishes that Mr. Sherman worked extraordinary hours, at times working 16 to 18 hours per day, regularly attending meetings at 6:30 in the morning and 11:00 at night as well as weekends, conducting on-the-ground reconnaissance surveys in the middle of the night, and photographing the fire’s progress between one and three
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o’clock in the morning. While some of these activities may have been required of Mr. Sherman himself as the Tribe’s designated Director of Emergency Services and Incident Commander for the fire, many of them might have been properly and lawfully delegated to others had Mr. Sherman’s understanding that he would receive extra compensation for these activities not been corroborated by the CFO, Tribal Attorney and Tribal Council. The Tribal Council clearly received the benefit of this arrangement as it received services from Mr. Sherman that might instead have been delegated by him or not performed at all, and which in any event, the evidence indicates the Council and various Tribal administrative personnel anticipated would ultimately be reimbursed by the Federal government.
Moreover, the record contains substantial evidence that the Tribal Council was silent when it had a duty to act and neglected to enforce its asserted rights at the proper time. Mr. Sherman presented evidence that the Chief Financial Officer and clerk had the knowledge and opportunity to challenge improper billings and in fact did so in regards to his travel reimbursements, but did not do so regarding his billings for fire-related work. The record indicates that Mr. Sherman’s billings for fire-related work began sometime around August of 1999 and the fire was extinguished or contained by December 1999. Yet the record establishes that the Tribal Council did not assert its legal rights until after the initial refusal of the federal government to reimburse the Tribe for Mr. Sherman’s time, letting more than two years pass between the initiation of the billings at issue and the filing of the complaint in this proceeding in December 2001. This delay on the part of the Tribal Government was a major focus of Mr. Sherman’s argument before the Court of Appeals as well as before the Tribal Court and clearly asserts the defenses of both laches and equitable estoppel, even though as a pro se litigant Mr. Sherman may not have been aware of those legal terms.
It was well within the discretion of the Tribal Court to apply the doctrine of estoppel, the Court applied the correct law, and the record contained substantial evidence supporting the Court’s findings. The Court in no way abused its discretion. Therefore, the Tribal Court’s ruling that the Tribal Council is estopped from seeking reimbursement from Mr. Sherman for compensation for work he actually performed on the Megram Fire is affirmed.
B. Hearsay
The Tribal Council argues that it was error for the Tribal Court to admit the testimony of Mr. Sherman that he had been advised by the Tribal Attorney that it would be lawful to bill his time to the fire suppression account because that testimony was inadmissible hearsay.
At trial, the Court asked Mr. Sherman, while he was under oath, "Did you ever ask for an opinion from the office of the Tribal Attorney as to the legality of your billing for your work on fire suppression with regards to <inaudible>?" Sherman’s answer was, "Yes, I did." The Court asked Sherman "Did the Tribal Attorney ever tell you that it was okay, it was lawful for you to bill from a client on fire connected work over and above your work as Chairman?" Sherman
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answered, "Yes.” At this point, Appellant objected on hearsay grounds, saying, "There is no way to cross examine Ms. Allen [the Tribal Attorney at the time], she is not a witness." The Court responded "I'm not accepting it for truth of the statement that it was okay to do it, I mean something <inaudible> as it bears on Mr. Sherman's notice."
Hearsay evidence is a statement made, other than by a witness while testifying, that is offered to prove the truth of the matter asserted. While the Tribal Court might have accepted the hearsay statement in this case under the exception to the hearsay rule for statements made by an agent and the theory that the Tribal Attorney was an agent of the Tribal Council, the Court did not do so. Rather, the Court accepted the statement, not for the truth of the matter asserted (i.e., that it was indeed lawful for Mr. Sherman to bill his time to the fire suppression account), but rather for the notice to Mr. Sherman that the Tribal Attorney was of a similar opinion regarding the legality of the billing arrangements. The Court in no way abused its discretion in doing so.
Calmat Company v. U.S. Department of Labor, supra, the case cited by Appellant regarding the appropriate standard of review regarding hearsay, directly supports the ruling of the Tribal Court on this point. In Calmat, the trial judge admitted an out-of-court statement that a fellow employee of a witness testifying under oath had called the witness a “white, bald-headed [expletive deleted].” The out-of-court statement was admitted, not to establish that the witness was white, bald, or the expletive, but rather was admitted as evidence that hostile and racially-offensive speech had occurred in the witness’s place of work. The Court of Appeals upheld the trial court’s ruling denying the hearsay objection, explaining, “[I]f the significance of an out-of-court statement lies in the fact that the statement was made and not in the truth of the matter asserted, then the statement is not hearsay.” Calmat, at 1124. The Court also explained that another statement made by the witness himself out-of-court that had been objected to on hearsay grounds was not hearsay because the witness “was testifying from his personal knowledge.” Id.
Here, the Tribal Court did not accept Ms. Allen’s statement to establish that it was true that the billing arrangements were lawful. Rather, the Tribal Court accepted the statement to establish that Mr. Sherman was given notice that Ms. Allen thought the billing arrangements were lawful. Mr. Sherman was a witness to the out-of-court statement and was testifying from his personal knowledge. While it is true that Appellant had no opportunity to cross-examine Ms. Allen, Appellant did have the opportunity to cross-examine Mr. Sherman and challenge his credibility and his recollection of the statement. Appellant did not do so. Under these circumstances, it would arguably have been an abuse of discretion for the trial court to not accept and give at least some weight to the sworn testimony of the witness.
Finally, as discussed in Calmat, the Court’s acceptance of the out-of-court statement must be determined to be prejudicial as well as an abuse of discretion before the Judgment of the Court will be reversed based on the hearsay objection. In addition to finding no abuse of discretion, this Court finds that there was no prejudice as there was sufficient evidence in the
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record beyond the challenged statement to support the Tribal Court’s finding that the Tribal Council acquiesced in the billing arrangements now being challenged.
VI. CONCLUSION AND ORDER
For the foregoing reasons, the Judgment of the Tribal Court is AFFIRMED. This matter is remanded to the Tribal Court for further proceedings consistent with this Opinion affording the Tribal Council the opportunity to remedy unjust enrichment for double payment as set forth at page five of the Trial Court’s Judgment After Trial.
The syllabus is not a part of the Court's Opinion. The syllabus is a summary of the Opinion prepared by the publishers of this Reporter only for the convenience of the reader. Therefore, the syllabus should not be cited in whole or part as legal authority. Only the Opinion, which follows the syllabus, may be cited as legal authority. This syllabus was designated "Summary" in the original file-stamped opinion.
As the Tribe argues HVTC § 2.1.01 permits Federal (and also state of California) rules and cases to be cited as persuasive argument where those rules are analogous to Tribal rules and caselaw. Appellant/Plaintiff Hoopa Valley Tribal Council’s Opening Brief, at 10.
The Tribe cites Bell Lavalin for the proposition that the second element of estoppel is that the party to be estopped “must intend that his conduct shall be acted upon.” Appellant/Plaintiff Hoopa Valley Tribal Council’s Opening Brief, at 14. Bell Lavalin actually states that the second element of estoppel does not require actual intent on the part of the party to be estopped, but rather allows that estoppel may also be invoked where the party to be estopped so acts “that the party asserting the estoppel has a right to believe” that the party to be estopped intended his/her conduct to be acted upon. 61 F.3d at 747.