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Lyon v. Gila River Indian Community

November 24, 2010

G. GRANT LYON, PLAINTIFF-COUNTER-DEFENDANT-APPELLEE,
v.
GILA RIVER INDIAN COMMUNITY, DEFENDANT-COUNTER-PLAINTIFF-APPELLANT.
IN RE: MICHAEL KEITH SCHUGG, DBA SHUBURG HOLSTEINS; DEBRA SCHUGG, DEBTOR,
G. GRANT LYON, PLAINTIFF-COUNTER-DEFENDANT- APPELLEE CROSS APPELLANT,
v.
GILA RIVER INDIAN COMMUNITY, DEFENDANT-COUNTER-PLAINTIFF-APPELLANT CROSS APPELLEE.



Appeal from the United States District Court for the District of Arizona, James A. Teilborg, District Judge, Presiding, D.C. Nos. 05-CV-02045-JAT & 2:05-CV-02045-JAT.

The opinion of the court was delivered by: Wallace, Senior Circuit Judge

FOR PUBLICATION

OPINION

Argued and Submitted January 14, 2010 -- San Francisco, California

Before: Alex Kozinski, Chief Judge, J. Clifford Wallace and Richard R. Clifton, Circuit Judges.

OPINION

This appeal involves a dispute between an Indian tribe and the trustee of a bankruptcy estate over the rights of access to and occupation of a parcel of land completely surrounded by Indian reservation land. The district court had jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1334. We have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1291, and we affirm in part and vacate in part.

I.

The center of the parties' dispute is "Section 16," a parcel of about 657 acres in Pinal County, Arizona. The land surrounding Section 16 is part of an Indian reservation (Reservation) belonging to the Gila River Indian Community (Community), a federally recognized Indian tribe. We start with the history of Section 16 and the Reservation.

The Community historically occupied the land that is now south-central Arizona. See Gila River Pima-Maricopa Indian Cmty. v. United States, 24 Ind. Cl. Comm'n 301, 303, 335 (1970). Through the 1853 Gadsden Purchase, the United States acquired title to land from Mexico, including what is now Section 16. The following year, Congress adopted a law providing that when a survey was completed of the lands within the purchased territory, "sections numbered sixteen and thirty-six in each township, in said Territory, shall be, and the same are hereby, reserved for the purpose of being applied to schools in said Territory, and in the States and Territories hereafter to be created out of the same." Act of July 22, 1854, ch. 103, § 5, 10 Stat. 308, 309. The lands were not literally meant to be sites for school buildings. Instead, the state was able to sell and lease them to produce funds supporting its schools. Lassen v. Arizona ex rel. Ariz. Highway Dep't, 385 U.S. 458, 463 (1967). In 1863, Congress partitioned the Territory of New Mexico to create the Territory of Arizona. Act of Feb. 24, 1863, ch. 56, § 1-2, 12 Stat. 664, 664-65. Section 16 became property of Arizona when a survey of the land was filed in 1877. See United States v. S. Pac. Transp. Co., 601 F.2d 1059, 1067 (9th Cir. 1979).

In 1859, Congress created a reservation for the Community. Act of Feb. 28, 1859, ch. 66, § 3-4, 11 Stat. 388, 401; see also Gila River Pima-Maricopa Indian Cmty., 24 Ind. Cl. Comm'n at 303. The Reservation did not originally abut Section 16; the borders of the Reservation were later enlarged through a series of executive orders. Of relevance here, an executive order dated November 15, 1883 added to the Reservation a parcel of land immediately to the north of Section 16, and an executive order dated June 2, 1913 added to the Reservation the land immediately to the south, east and west of Section 16. The result is that since 1913, Section 16 has been completely surrounded by Reservation land. Section 16 can be accessed using Smith-Enke Road, an east-west road that runs adjacent to the southern boundary of Section 16 and crosses Reservation land before continuing west to the City of Maricopa and east to the City of Sacaton. Section 16 can also be accessed by Murphy Road, a north-south road that runs adjacent to the eastern boundary of Section 16 and crosses Reservation land before continuing south to the City of Maricopa, and north for two miles until intersecting with another road at a point within the Reservation.

The State of Arizona held Section 16 until 1929, when it sold the parcel to an individual named J.L. Hodges, pursuant to a patent conveying the land "together with all the rights, privileges, immunities and appurtenances of whatsoever nature" and "subject to any and all easements or rights of way heretofore legally obtained." Section 16 has since been sold several times, each time conveyed by a deed containing similar language. In 2001, a company called S&T Dairy, L.L.C., owned by the children of Michael and Debra Schugg (the Schuggs), purchased Section 16 and constructed a dairy on the property. In 2003, S&T Dairy conveyed Section 16 to the Schuggs. In 2004, the Schuggs sought to have Section 16 rezoned, from "rural" to "transitional," a change that would allow construction of a higher-density housing development. Pinal County rejected the Schuggs' application to rezone Section 16.

Also in 2004, the Schuggs declared bankruptcy and listed Section 16 as their largest asset. G. Grant Lyon was appointed the Chapter 11 Trustee (Trustee) of the Schuggs' bankruptcy estates. During the bankruptcy proceedings, the Community filed a proof of claim asserting, of relevance here, that it had (1) "an exclusive right to use and occupy" Section 16, (2) "authority to impose zoning and water use restrictions" on Section 16, and (3) "a right to injunctive and other relief for trespass on reservation lands and lands to which it holds aboriginal title." In response, the Trustee initiated an adversary proceeding seeking a declaratory judgment that the Schuggs' estate had legal title and access to Section 16. The district court granted the Community's unopposed motion to withdraw the reference, thereby transferring the adversary proceeding to the district court.

In the district court, the Community moved to dismiss the case on the basis that the litigation should not proceed without the United States as a party. See Fed. R. Civ. P. 19. The district court denied the motion without prejudice to its renewal. The Community then filed an answer and counterclaims against the Trustee. The Community alleged, as it had in its proof of claim, that it held aboriginal title to Section 16; that nonmembers had no right to cross Reservation land to access Section 16 and had therefore committed trespass to reach the parcel; and that it had authority to establish zoning and water use restrictions for Section 16. The Community sought declaratory and injunctive relief prohibiting the Schuggs from further trespass and compensatory damages for past trespasses.

On cross-motions for summary judgment, the district court granted the Trustee's motion in part, ruling that the Community did not hold aboriginal title to Section 16. It denied summary judgment on all other issues.

Following a bench trial, the district court issued findings of fact and conclusions of law. The district court held that the United States was not an indispensable party under Rule 19. The district court also determined that the Trustee had an implied easement over Smith-Enke Road to access Section 16. It further concluded that the Trustee had a right of access over Murphy Road, either because of an implied easement or because the relevant portion of the road was an Indian Reservation Road that must remain open for public use. The district court held, therefore, that the Schuggs had not trespassed on Reservation land. The district court rejected the Trustee's argument that it had a right to access Section 16 on the additional ground that Smith-Enke and Murphy Roads were public roads under Revised Statute 2477 (R.S. 2477), 43 U.S.C. § 932 (repealed 1976). Finally, addressing the Community's assertion of authority to control the zoning of Section 16, the district court held that the issue was not ripe for decision. The Community appeals from the district court's judgment regarding necessary and indispensable parties, the Trustee's rights of access to Section 16, and the rejection of the Community's assertions of aboriginal title and zoning authority over Section 16. The Trustee cross-appeals from the district court's judgment that Smith-Enke Road and Murphy Road are not public roads under R.S. 2477.

II.

We first review the district court's determinations, under Rule 19, that this case could proceed without the United States or the individual Indian allottees of land abutting Section 16. We review a district court's decision regarding join-der for abuse of discretion, but we review legal conclusions underlying that decision de novo. E.E.O.C. v. Peabody Western Coal Co., 400 F.3d 774, 778 (9th Cir. 2005).

A court first determines which parties must be joined under the criteria of Rule 19(a). See Fed. R. Civ. P. 19(a). Then, if a party that meets the criteria cannot be joined, the court must decide "whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed." Fed. R. Civ. P. 19(b).

The Community argues that the United States was a necessary party to the dispute over the Community's aboriginal title claim and the Trustee's alleged rights of access to Section 16. The Community further argues that, because the United States could not be joined due to sovereign immunity, the case should have been dismissed. Of course, the United States may be necessary as to some claims and not others. See Makah Indian Tribe v. Verity, 910 F.2d 555, 559 (9th Cir. 1990) (Indian tribes were necessary to some, but not all, claims asserted in the action). We first determine whether the United States was a necessary and indispensable party to the Community's aboriginal title claim. We then analyze whether the United States was a necessary and indispensable party to claims regarding the Trustee's rights of access.

A.

[1] Aboriginal title is a "permissive right of occupancy granted by the federal government to the aboriginal possessors of the land." United States v. Gemmill, 535 F.2d 1145, 1147 (9th Cir. 1976). "It is mere possession not specifically recognized as ownership... and may be extinguished by the federal government at any time," although such "extinguishment cannot be lightly implied in view of the avowed solicitude of the Federal Government for the welfare of its Indian wards." Id. (internal quotation marks and citations omitted). Whether a tribe has aboriginal title to occupy land is an inquiry entirely separate from the question of who holds fee title to land. Indeed, it is possible for a party to take title to land subject to an aboriginal right of occupancy. See, e.g., Beecher v. Wetherby, 95 U.S. 517, 525-26 (1877) (federal government transferred fee "subject to" an aboriginal right of occupancy).

[2] With regard to the Community's claim of aboriginal title, we hold that the United States is not a necessary party under the criteria of Rule 19(a). The United States does not "claim[ ] an interest" in Section 16. The United States granted Section 16 to Arizona and has not since held it either in fee or as a trustee. Fee title to the Reservation land is held by the United States in trust for the Community, but Section 16 is not, and has never been, part of the Reservation. Thus, the United States has no interest in Section 16.

In addition, complete relief can be accorded among the existing parties without joining the United States. See Fed. R. Civ. P. 19(a). The Community's claim of aboriginal title is based on a theory that the federal government's transfer of Section 16 to Arizona (and hence to all subsequent owners) was subject to the Community's aboriginal title. The Community argues that its aboriginal title to Section 16 cannot be extinguished without the consent of the United States, and that the United States must be joined to obtain that consent. This premise is wrong. The district court did not purport to extinguish aboriginal title. Rather, the district court determined whether Congress had already extinguished the Community's aboriginal title. Joinder of the United States is not necessary to answer that question.

Because the United States is not required to be joined in order to adjudicate the Community's aboriginal title claims, we need not decide whether such claims can proceed without the United States under Rule 19(b). We also need not decide whether the United States has waived its sovereign immunity as to actions regarding aboriginal title.

B.

[3] We next determine whether the United States is necessary and indispensable to adjudication of claims regarding the Trustee's rights of access to Section 16. In this regard, the Trustee does not dispute the district court's conclusion that the United States should be joined as a necessary party under Rule 19(a). The United States holds legal title to the Reservation lands as a trustee for the Community, and any right of access to Section 16 must run over Reservation land. The United States therefore has an interest in the parties' right of way disputes because judicial recognition of an easement would impair the government's right. Cf. United States v. Vascarajs, 908 F.2d 443, 445-47 (9th Cir. 1990). If the claims regarding rights of access to Section 16 are resolved without the federal government's participation in this action, the result may "as a practical matter impair or impede the [govern-ment's] ability to protect the interest." Fed. R. Civ. P. 19(a)(1)(B)(i). Thus, the United States should be joined under Rule 19(a).

[4] The district court concluded, and the Trustee does not dispute, that the United States' joinder was impossible because it had not waived sovereign immunity. We therefore review "whether, in equity and good conscience, the action should proceed among ...


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