7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005)
IN THE HOOPA VALLEY TRIBAL COURT OF APPEALS
HOOPA VALLEY INDIAN RESERVATION
HOOPA, CALIFORNIA
Hoopa Valley Housing Authority, Appellant,
v.
Ronnie Dean Davis and Duane Sherman, Sr., Appellees.
No. C-03-001 (June 21, 2005)
SYLLABUS*
Trial court dismissed claims for negligence and accounting brought by Housing Authority against Housing Authority’s former Executive Director and former Tribal Chairman, who also served as Chair of Housing Authority’s Board of Commissioners. Court of Appeals holds former Tribal Chairman is protected by sovereign immunity; former Executive Director did not owe employer a fiduciary duty that would give rise to a negligence claim; and Housing Authority failed to present evidence that former Executive Director was in a position to perform an accounting. Trial court order dismissing all claims affirmed.
Before: Larry King, Chief Justice; Darwin Long Fox, Justice; Eric Nielsen, Justice.
Appearances: David Dehnert, Counsel for Appellant; Ronnie Dean Davis, pro se; Duane Sherman Sr., pro se.
OPINION
Nielson, J.:
I. STATEMENT OF FACTS AND PROCEDURAL HISTORY
In 1996, the Hoopa Valley Tribal Council appointed itself as the Hoopa Valley Housing Authority Board of Commissioners. The Housing Authority is the Tribal entity established, in part, to obtain federal housing funding.
Respondent Duane Sherman was elected Tribal Council Chairman in 1997. He was removed from the position in 1998 but was reelected and served as Chairman from 1999 to 2001.
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 35
During that same period, respondent Ronnie Davis was the Executive Director of the Housing Authority.
In 1999 Davis submitted a grant proposal to the Department of Housing and Urban Development (HUD). The proposal included a project called “Project Renewal.” The Housing Authority received over 1.5 million dollars in grant money from HUD under the Native American Housing Assistance and Self-Determination Act (NAHASDA).
Davis testified that a HUD representative told him that the grant money needed to be spent within two years or the Tribe would lose the money. In a matter of a few months the Housing Authority hired approximately 150 new employees. In addition, to keep “Project Renewal” going, Housing Authority employees were authorized to charge tools and building materials at local stores. The Housing Authority and its employees eventually purchased over $140,000 in tools and over $300,00 in building supplies. Employees stored tools and equipment at their homes or in their trucks. Building materials were generally stored on site.
The rapid influx of new employees and the amount of tools and building supplies purchased by the Housing Authority and its employees quickly overwhelmed the Housing Authority’s administrative abilities. The Housing Authority’s management had no system for accounting for the tools, equipment or building materials and employee paychecks were sometimes late. Davis advised the Tribal Council of the problems he was encountering managing “Project Renewal” and other Housing Authority projects. Davis talked with HUD and the Tribal Council about getting some accounting help but none was immediately provided.
In 1999 and 2000 HUD audited the Housing Authority. The audits found a number of deficiencies and concerns, including a lack of accountability for materials and equipment. HUD requested the Housing Authority take action to recover the tools, or the value of the tools, from the employees who purchased the tools. A significant number of the tools purchased with “Project Renewal” funds have never been recovered and it was alleged some were stolen.
On January 20, 2003, the Housing Authority filed a complaint against a number of Housing Authority employees involved in “Project Renewal.” It also filed a complaint against Sherman and Davis. The complaint alleged Sherman and Davis were negligent and as a result of their negligence they were liable for the missing tools and for the misuse of building materials. The complaint also alleged Davis converted the tools and building materials.
In May 2004, a lengthy bench trial on the allegations against Sherman and Davis was held in the Hoopa Valley Tribal Court before Judge Pro Tem M.K. Tescher, Jr. The Housing Authority abandoned the conversion claim against Davis. During the trial, the parties submitted over 90 exhibits and the testimony of 9 witnesses, including Sherman and Davis.
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 36
On June 22, 2004, Judge Tescher issued a written decision.1 Judge Tescher dismissed the allegations against Sherman on the grounds that Sherman was immune from the suit because Sherman’s acts regarding “Project Renewal” were within the scope of his authority as the Tribal Chairman. He also ruled Sherman had no personal responsibility for the loss of the tools. Judge Tescher concluded Sherman’s responsibility for the missing tools was no different than the rest of the Tribal Council.
Judge Tescher also dismissed the negligence suit against Davis finding Davis did not breach any duty he owed to the Housing Authority. Judge Tescher denied the Housing Authority’s request for an accounting from Davis based on the finding that Davis never possessed any of the missing or lost tools or materials and that he had no knowledge or information regarding the whereabouts of the missing property.
The Housing Authority appealed. Oral argument was held on May 13, 2005. Mr. David Dehnert appeared on behalf of the Housing Authority and Sherman and Davis appeared on their own behalf.
II. DISCUSSION
A. Sherman
The Housing Authority claims the trial court erred in ruling that Sherman is immune from this negligence suit because he acted outside the scope of his authority as Tribal Chairman.2 We disagree.
Federal courts have long recognized that Indian tribes possess the common-law immunity from suit enjoined by sovereign powers. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978). A sovereign cannot be sued without expressly consenting to suit unless Congress or the Tribe has waived the Tribe’s sovereign immunity. Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. 751 (1998); Oklahoma Tax Comm’n. Citizen Band of Potawotmi Tribe of Okla., 498 U.S. 505 (1991). Even where a tribe is a plaintiff, "[a] waiver of sovereign immunity 'cannot be lightly implied but must be unequivocally expressed.'" United States v. Mitchell, 445 U.S. 535, 538, (1980), quoting United States v. King, 395 U.S. 1, 4 (1969).
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 37
Tribal immunity also extends to individual tribal officials and employees while acting within their scope of authority. Hardin v. White Mountain Apache Tribe, 779 F.2d 476, 479 (9th Cir. 1985); United States v. Yakima Tribal Court, 806 F.2d 853, 861 (9th Cir. 1986), cert. denied, 481 U.S. 1069 (1987). The legal rationale in support of conferring immunity on a tribal official is that the official must be able to exercise his or her duties free from intimidation, harassment and the threat of lawsuits for performing those acts of the tribal government that are within the scope of the official’s duties. Satiacum v. Sterud, 10 ILR 6013, 6016 (Puy. Tr. Ct., Apr. 23, 1982).
There is no dispute Sherman was the Tribal Chairman during the Housing Authority’s “Project Renewal.” As an elected tribal official, Sherman is protected from suit for acts he performed in the course of his official duties. The Housing Authority, however, argues that Sherman acted outside the scope of his authority and is not protected by the Tribe’s sovereign immunity. Specifically, the Housing Authority contends that Sherman’s conduct while Tribal Chairman and Chairman of the Housing Authority’s Board of Commissioners3 violated Federal and Tribal law and his action were “pursuant to an unconstitutional Tribal ordinance.”4 In support of its argument the Housing Authority relies on Ex Parte Young, 209 U.S. 123 (1908).5
At the time of “Project Renewal”, the Hoopa Valley Tribal Council had assumed the role of the Housing Authority Board of Commissioners. Title 27 of the Hoopa Valley Tribal Code, the ordinance establishing the Housing Authority, was ratified by referendum. Under Article VII § 4 of the Hoopa Valley Constitution, any ordinance submitted to referendum for ratification can only be amended by referendum.6 The ordinance allowing the Tribal Council to assume the role of the Housing Authority Board of Commissioners, Title 42, was not voted on by referendum. The Housing Authority contends the Tribal Council illegally assumed the duties of the Housing Authority Board of Commissioners in violation of Article VII § 4 of the Hoopa Valley Constitution. Therefore, according to the Housing Authority, Sherman acted illegally because he “assumed the duties of the Hoopa Valley Housing Authority Board Chairman when he took office as the Hoopa Valley Tribal Chairman” after the Tribal Council “illegally” dissolved the Housing Authority Board of Commissioners.7
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 38
The Housing Authority also argues that although Sherman illegally assumed the duties of the Hoopa Valley Housing Authority Board Chairman, he was responsible for assuring that “Project Renewal” complied with the Native American Housing Assistance and Self-Determination Act (NAHASDA). 25 U.S.C. 4101 et. seq. Under the Act, a tribe is entitled to grant money upon the approval of an Indian Housing Plan (IHP). The Housing Authority contends that Sherman violated federal law because NAHASDA funds were used for “Project Renewal” and it was not part of the IHP or approved by HUD until after the project terminated.
The claim of immunity is not defeated if a government or tribal official acts improperly. US v. Yakima Tribal Ct., 806 F2d 853, 860 (9th Cir 1986). Otherwise a claim of sovereign immunity could always be thrust aside by an assertion that the government official acted negligently and sovereign immunity would become an essentially meaningless protection. Immunity, however, does not protect a government officer whose actions are based on unconstitutional laws or on continuing violations of the law. Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682 (1949). In Ex Parte Young, supra, the United States Supreme Court held that suits seeking prospective, but not compensatory or other retrospective relief, may be brought against a government officials challenging the constitutionality of the official’s conduct. The purpose of allowing prospective injunctive or declaratory relief against officials is to prevent future violations of the law. Tamiami Partners, Ltd. v. Miccosukee Tribe of Indians of Florida, 177 F.3d 1212, 1225 (11th Cir.1999); Arizona Pub. Serv. Co. v. Aspaas, 77 F.3d 1128 (9th Cir.1995); Duran v. Carruthers, 885 F.2d 1485 (10th Cir. 1989), cert. denied, 493 U.S. 1056 (1990).
Even if we agreed with the Housing Authority that the Tribal Council acted contrary to the Hoopa Valley Constitution when it assumed the role of the Housing Authority Board of Commissioners, and that the Housing Authority violated provisions of the federal housing law, it is irrelevant to the issue in this case.8 It was the Tribal Council that voted to assume the role of the Housing Authority Board of Commissioners and it had the management responsibility over the Housing Authority. See Hoopa Valley Tribal Code, Title 19, IV 1. Sherman was only one member of the Tribal Council and the Housing Authority Board Commissioners.9 Moreover, although the Housing Authority argues Sherman’s actions were outside the scope of his authority
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 39
because Title 42 was not subjected to referendum, it also argues that Sherman’s actions were within the scope of his authority under Titles 18, 19 and 30 of the Hoopa Valley Tribal Code.10
In sum, the Housing Authority has failed to show that any of Sherman’s acts regarding “Project Renewal” were outside the scope of his authority as Tribal Chairman. As Judge Tescher correctly pointed out, if an elected Hoopa Valley Tribal official can be sued for negligence in the performance of his or her duty it would make the losing of an election dangerous. The trial court properly dismissed the suit against Sherman.
B. Davis
The Housing Authority argues the trial court erred in dismissing the negligence and accounting suit against Davis. We disagree.
To establish negligence under Anglo common law, the plaintiff must prove that the defendant owed the plaintiff a legal duty, that the defendant breached that duty, and the breach proximately caused injury to the plaintiff. Trujillo v. North County Transit Dist. 63 Cal.App.4th 280, 286-287, 73 Cal. Rptr.2d 596 (1998); Mann v. The Navajo Tribe, 4 Nav. R. 83, 84 (1983). The elements of breach of duty and causation are questions for the fact finder. Andrews v. Well, 204 Cal.App.3d 533, 538, 251 Cal.Rptr. 344 (1988). Whether a defendant owes the plaintiff a legal duty, however, is a question of law. Marlene F. v. Affiliated Psychiatric Med. Clinic, Inc., 48 Cal.3d 583, 588, 257 Cal.Rptr. 98, 770 P.2d 278 (1989); Andrews v. Wells, 204 Cal.App.3d at 538. 11
The Housing Authority contends that because Davis was the Executive Director of the Authority, Title 19 HVTC § 6.4.,12 the Hoopa Valley Tribal Budget Ordinance, imposed upon
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 40
him a legal “fiduciary” duty to carry out the “purpose, goals and obligations of the Housing Authority.”13
Davis was a Tribal management employee.14 The Housing Authority has not cited any persuasive authority for its legal proposition that a Tribal management employee owes what it has termed a “fiduciary” duty under the Budget Ordinance. Furthermore, the Housing Authority has failed to define the scope and nature of the legal “fiduciary” duty it claims Davis owed to the Authority.15 An employee has a general duty of loyalty and the obligation to act in a manner that is not inconsistent with his agency. That duty, however, does not implicate an undefined legal “fiduciary” duty that, under the Housing Authority’s theory, exposes the employee to liability for damages suffered by the Tribe as a result of the employee’s failure to adequately perform his job.16 If we were to accept the Housing Authority’s theory that every Hoopa Valley Tribal management employee is potentially liable for monetary damages suffered by the Tribe as a result of negligently performing his or her job, it would make it difficult, if not impossible, for the Tribe to retain management employees.17 Thus, we are not persuaded the legislative intent of Title 19 of the Hoopa Valley Tribal Code is to render a management employee liable to the Tribe for monetary damages as a result of the employee’s failure to adequately carry out the “purpose, goals and obligations” of a Tribal program. 18
The Housing Authority’s theory is unsupported by the law, logic and sound policy.19 We hold that as a matter of law Davis did not owe the Housing Authority an undefined legal
7 NICS App. 34, HOOPA VALLEY HOUSING v. DAVIS AND SHERMAN (June 2005) p. 41
“fiduciary” duty that can give rise to a negligent action under the theory that he performed his job inadequately.20
One of the remedies the Housing Authority seeks from Davis is an accounting of the tools and materials purchased by the Housing Authority and its employees. The trial court found Davis never had possession of the tools and has no information or knowledge regarding the whereabouts of the missing tools and supplies. The Housing Authority presented no evidence to the contrary. Even if the Housing Authority had shown Davis was negligent, Judge Tescher did not err in dismissing the Housing Authority’s request to order Davis to provide an accounting of the missing tools and supplies.
The trial court’s order dismissing the suit against Davis is affirmed.
III. CONCLUSION
The trial court correctly dismissed the negligence and accounting suit against Duane Sherman on immunity grounds. The trial court correctly dismissed the negligence suit against Ronnie Davis because the Housing Authority failed to establish as a matter of law that Davis owed it a “fiduciary” duty that would support the Housing Authority’s negligence claim. The trial court also correctly dismissed the Housing Authority’s request that Davis provide an accounting of the tools, equipment and materials purchased during his tenure as its Executive Director because the Housing Authority failed to present any evidence to that Davis was in a position to perform such an accounting.
For the foregoing reasons, the decision of the trial court is affirmed. 21
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.
Judge Tescher entered a 16 page document entitled Decision. In his Decision, Judge Tescher summarizes the facts and his reasons for dismissing the suit. We take this opportunity to remind the Hoopa Valley Tribal Court trial court judges that Title 3, Rule 24 of the Hoopa Valley Tribal Code requires that “In all actions tried upon the facts without a jury, the Court shall find the facts specifically and state separately its conclusions of law thereon…” Although Judge Tescher’s Decision was helpful, it did not state what facts the court specifically found, what witnesses it found credible and what witnesses it did not find credible, and the legal principles relied upon to support the court’s legal conclusions. Consequently, it was difficult for this Court to discern what informed Judge Tescher’s Decision.
Brief of Appellant (BOA) at 18-19.
When the Tribal Council assumed the role of the Housing Authority’s Board of Commissioners, Sherman, as Tribal Chairman, became the defacto Chairman of the Housing Authority Board of Commissioners.
BOA at 19.
BOA at 18.
Article VII § 4 reads:
Upon receipt of a petition signed by one-third (1/ 3) of the voters who participated in the last election or upon receipt of a resolution of the Council, the election board shall call and conduct within forty-five (45) days an election on any enacted or proposed enactment of the Council, or any proposal initiated by the voters. Should that measure fail, it cannot be reconsidered until at least one (1) year has passed. Should it pass, the Council is bound by that decision. Any ordinance submitted to referendum for ratification can only be amended by like action.
BOA at 20.
The record does not show that the Housing Authority, Sherman or Davis have ever been charged with or convicted of violating any federal law.
Judge Tescher found Sherman’s management responsibilities were no different than the rest of the Council. Based on the record, we agree. If the Housing Authority was correct that Sherman is not immune from this suit, then the entire Tribal Council in office at the time of the alleged negligence should have been joined as co-Defendants under Title 2 HVTC § 2.2.04 which requires that a person “shall” be joined in an action “if the persons already parties would be subject to incurring the obligations of a person not a party to the action.”
BOA at 29. The Housing Authority’s legal arguments are internally inconsistent and self-contradictory. On the one hand, the Housing Authority argues that the duty element of its negligence claim against Sherman is satisfied because Sherman had statutorily prescribed supervisory duties over Davis and the Housing Authority. On the other hand, the Housing Authority argues that Sherman should not be afforded the protections of sovereign immunity because his exercise of supervisory responsibility over Davis and the Housing Authority were outside his statutory authority. The Housing Authority cannot have it both ways.
The parties have not argued whether Hoopa Valley Tribal law recognizes the tort of negligence and if it does that the elements are different than the Anglo common law. Therefore, for the purpose of this appeal, we will assume a negligence action can be properly alleged under Hoopa Valley Tribal law and the elements of the Anglo common law tort of negligence applies to those actions.
That provision reads:
All program managers have the direct day to day responsibilities to assure that their programs are operated in compliance with the budgets approved under this Ordinance, as well as all other applicable laws and regulations. Program managers shall be directly responsible for obtaining monthly financial statements for their respective programs and projects and they are required to report immediately to the Tribal Chairman and CFO any deviations from their approved fiscal year budget. All managers are required to identify and report to the CFO, in writing, any matters that prevent compliance with their programs legally adopted budget. This information is to be reported before any steps are taken which are not in compliance with the approved budget. If a program manager learns that an action has been or is about to be taken which is not in compliance with the programs approved budget, the program manager becomes directly and immediately responsible for insuring that the problem is corrected, whether or not he or she is directed to do so by the CFO or Tribal Chairman. For the purposes of this Ordinance, the term "manager" shall include any director, manager, chief, or interim official who has direct control over the operations of a program and project, regardless of the time served in such position. Title 19 HVTC § 6.4.
BOA at 28-29.
Davis was eventually terminated as Executive Director of the Housing Authority.
The term “fiduciary” has many meanings. See Black’s Law Dictionary, 625 (6th Edition, 1990).
The Tribe can terminate an employee who intentionally or negligently fails to adequately perform his or her job. See Title 30, Hoopa Valley Tribal Code. The Tribe can also prosecute employees who commit any illegal acts against the Tribe, such as theft or fraud.
In its original complaint the Housing Authority alleged conversion but the Authority abandoned that claim at trial. Thus, there is no allegation Davis illegally appropriated Housing Authority property.
The purpose of the Ordinance is “to control the use and expenditure of any and all Hoopa Valley Indian funds….” Title 19 HVTC § 1.
The Housing Authority’s theory ignores the fiduciary shield doctrine, which is an equitable doctrine that “confers jurisdictional immunity upon corporate officials, even though their conduct be tortious as long as the actions taken were in the interests of the corporation and not purely personal and the corporation is not merely a shell for the individual and does not lack sufficient assets to respond.” Black’s Law Dictionary, 626 (6th Edition, 1990).
We do not imply that Davis was negligent. The trial court found there was no evidence Davis did anything dishonest and that during his tenure Davis was concerned about the needs of the Tribe. The facts support those findings. Furthermore, there are prescribed penalties for violation of the Budget Ordinance:
The Tribal Court shall have such authority to impose penalties for infractions under this Ordinance. These penalties are to be based on the circumstances surrounding and magnitude of the violation. Misuse of tribal funds for personal gain, intentional violations, fraud and embezzlement of tribal funds shall carry with them the strictest penalties available. Such penalties may include, but are not limited to: the remedies outlined in the Tribe's Personnel policies and procedures, the imposition of fines, and person and punitive damages, and the recommendation that additional charges be brought in other appropriate courts which have jurisdiction over such matters. Title 19 HVTC § 8.3.
If the Housing Authority believed Davis violated the Budget Ordinance the remedy was to bring an action under this provision and not attempt to circumvent Tribal law by bringing a negligence suit.
We note that given the Housing Authority’s allegations, the lack of evidence in support of those allegations, and the pertinent law, litigating this case was a waste of both the Hoopa Valley Housing Authority’s and the Hoopa Valley Tribe’s resources.