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Rincon Mushroom Corporation of America v. Mazzetti

United States District Court, S.D. California

July 26, 2017

RINCON MUSHROOM CORPORATION OF AMERICA, a California Corporation, Plaintiff,
v.
BO MAZZETTI; JOHN CURRIER; VERNON WRIGHT; GILBERT PARADA; STEPHANIE SPENCER; CHARLIE KOLB; DICK WATENPAUGH; DOE CO.; and DOE I and DOE II, Defendants.

          ORDER

          WILLIAM Q. HAYES United States District Judge

         The matters before the Court are the Motion to Re-Open Federal Case After Exhaustion of Tribal Remedies (ECF No. 83) and the Second Motion to Re-Open Federal Case-Post Trial In Tribal Court and the Request for Preliminary Injunction (ECF No. 92) filed by Plaintiff Rincon Mushroom Corporation of America (hereinafter “RMCA”).

         I. Procedural Background

         On October 20, 2009, RMCA initiated this action by filing the Complaint. (ECF No. 1). The action concerns tribal regulation of non-Indian fee simple land located within the boundaries of the reservation of the Rincon Band of Luiseno Mission Indians. Defendants Bo Mazzetti, John Currier, Vernon Wright, Gilbert Parada, Stephanie Spencer, Charlies Kolb, and Dick Watenpaugh (“the Rincon Band Defendants”) are tribal officials sued in their individual and official capacities. Id. ¶¶ 4-5.

         The Complaint alleges the following ten causes of action: (1) intentional interference with contract; (2) intentional interference with advantageous economic relationship; (3) conspiracy to intentionally interfere with contract; (4) conspiracy to intentionally interfere with advantageous economic relationship; (5) conspiracy to deprive plaintiff of equal protection and equal privileges and immunities under 42 U.S.C. § 1985(3); (6) civil RICO; (7) civil RICO conspiracy; (8) negligent interference with contract; (9) negligent interference with advantageous economic relationship; and (10) violation of 42 U.S.C. § 1983. (ECF No. 1).

         On September 21, 2010, the Court entered an Order granting a Motion to Dismiss filed by the Rincon Band Defendants. (ECF No. 54). The Court concluded that RMCA “satisfied the requirements to establish Article III standing in this matter” but dismissed the Complaint for failure to exhaust tribal court remedies. The Court stated,

Given the breadth of the declaratory and injunctive relief requested by the Plaintiff, there is a “colorable or plausible” claim to tribal regulatory and tribal court jurisdiction pursuant to Montana's second exception. Elliott, 566 F.3d at 848; cf. Montana II, 137 F.3d at 1141. Although Montana's second exception should not “be construed in a manner that would swallow the rule or severely shrink it, ” Plains Commerce Bank, 128 S.Ct. at 2720, neither should it be construed in a manner that would eliminate the exception entirely. Because tribal court jurisdiction is plausible, ‘principles of comity require [federal courts] to give the tribal courts a full opportunity to determine their own jurisdiction in the first instance.” Elliott, 566 F.3d at 850-51. The Court concludes that Plaintiff must exhaust tribal remedies prior to asserting its claims in this Court.

(ECF No. 54 at 13-14).

         The Ninth Circuit Court of Appeals affirmed the Court's determination that RMCA must exhaust its tribal remedies on the issue of tribal jurisdiction before bringing suit in federal court. (ECF No. 66). The Court of Appeals stated,

We emphasize that we are not now deciding whether the tribe actually has jurisdiction under the second Montana exception. We hold only that where, as here, the tribe's assertion of jurisdiction is “colorable” or “plausible, ” the tribal courts get the first chance to decide whether tribal jurisdiction is actually permitted. If the tribal courts sustain tribal jurisdiction and Rincon Mushroom is unhappy with that determination, it may then repair to federal court.

Id. at 4. However, the Court of Appeals held that this Court abused its discretion in dismissing the case rather than staying it. Id. at 5. The Court of Appeals reversed the court's dismissal and remanded with instructions to stay the case pending RMCA's exhaustion of tribal remedies. Id.

         On August 1, 2012, this Court issued an Order spreading the mandate, ordering the Clerk of Court to reopen the case, and staying the case pending the exhaustion of tribal remedies. (ECF No. 65).

         In the years following the Order staying the case, the Court ordered and the parties filed three status reports as to the exhaustion of tribal remedies. (ECF Nos. 72, 78, 81). On June 25, 2015, the Court issued an Order administratively closing the case “without prejudice to any party to move to reopen, and without prejudice to the resolution of any statute of limitations issue associated with the filing of this complaint.” (ECF No. 82 at 3).

         On December 16, 2016, RMCA filed the Motion to Reopen Federal Case after Exhaustion of Tribal Remedies. (ECF No. 83). On January 9, 2017, the Rincon Band Defendants filed a response in opposition. (ECF Nos. 84, 85-90). On January 18, 2017, RMCA filed a reply. (ECF No. 91).

         On June 20, 2017, RMCA filed a second Motion to Re-Open Federal Case-Post Trial In Tribal Court and a Request for a Preliminary Injunction. (ECF No. 92). The Rincon Band Defendants filed a response in opposition. (ECF No. 93). RMCA filed a reply. (ECF No. 94).

         II. Allegations of the Complaint

         In 1982, RMCA, a non-Indian corporation, purchased from a non-Indian five acres of land within the exterior boundary of the Rincon Tribal Reservation. (ECF No. 1 at ¶ 9). In 1960, the property was “allotted and conveyed out of Tribal ownership, ” and since that time, “the property continuously has been, and now remains, non-Indian fee land.” Id. (quotation omitted). RMCA owned the land in fee simple until 1999, when it sold the land to Marvin Donius, also a non-Indian. Id. ¶ 11. RMCA “receiv[ed] as partial consideration . . . a promissory note in a substantial amount, together with a ‘carry-back' deed of trust.” Id. Donius and RMCA used the land as a “non-tribal mixed use commercial facility.” Id. at ¶ 13. “The property is located in an ‘open' part of the Rincon Reservation . . . from the Rincon Tribe's public casino.” Id. ¶ 10.

         On March 15, 1960, the Rincon Tribe enacted Articles of Association, which state that the “Rincon Tribal Business Committee ... shall have jurisdiction over the lands within the boundaries of the Rincon Reservation.” Id. ¶ 19. On or about April 2007, “the Rincon Tribe enacted a ‘Tribal Environmental Policy Ordinance' that . . . purportedly placed under the governmental jurisdiction of the Tribe the subject parcel, on the asserted basis that the Tribe's regulatory authority extended to and included all land within the exterior boundaries of the Rincon Reservation.” Id. ¶ 20 (quotations omitted). “[T]he Rincon Tribe enacted an Environmental Enforcement Code that as revised on or about July 10, 2007 purported to extend tribal environmental regulatory authority over and as to [the] subject property, on the basis of the Tribe's claim of such authority over all lands within the exterior boundaries of the Rincon Indian Reservation.” Id. ¶ 21 (quotations omitted). “On ... September 30, 2008, these defendants caused the Rincon Tribe to enact a Tribal Court Jurisdiction Ordinance that purported to claim regulatory as well as in personam and subject matter adjudicative jurisdiction over non-tribal member plaintiff, non-tribal member Donius, and as to subject non-tribal fee property, ... and also purports to extend the Tribe's Territorial Jurisdiction over any fee lands within the external boundaries of the Rincon Reservation....” Id. ¶ 22 (quotations omitted).

         The first count of the Complaint seeks a judicial declaration that “any prospective or future actual or attempted enforcement by these defendants of” the above-referenced Articles of Association, Tribal Environmental Policy Ordinance, Environmental Enforcement Code, and Tribal Court Jurisdiction Ordinance is “facially unconstitutional, unconstitutional as applied, and/or illegal, and/or entirely unenforceable, pursuant to applicable provisions of federal and California law, both with respect to plaintiff as well as concerning subject property.” Id. ¶ 23(a).

         The second count of the Complaint seeks the issuance of “a mandatory injunction requiring and ordering that the above-named Tribal defendants desist and refrain from any further actual or attempted enforcement, prospectively and in the future, of any and all purported Rincon Tribe regulatory or adjudicative authority over or as to plaintiff and/or over or as to subject property.” Id. ¶ 29.

         III. Recent Tribal Court Proceedings

         In 2010, a tribal court in the Intertribal Court of Southern California (“the tribal court”) issued an order granting the Rincon Band of Luiseno Indians' (the “Rincon Band”) application for a preliminary injunction against Marvin Donius, Mushroom Express, Inc., and RMCA. (ECF No. 85-1). The preliminary injunction order states that Donius, Mushroom Express, Inc., and RMCA are, among other restrictions, “enjoined from bringing any additional property onto the subject property.” Id. at 3.

         On September 27, 2016, the Rincon Band filed a motion for order to show cause regarding civil contempt in the tribal court alleging that Donius and RMCA had began constructing a structure on the property in violation of the preliminary injunction. (ECF No. 85-3). On November 2, 2016, the tribal court held a hearing regarding a motion for partial summary judgment on the issue of jurisdiction and this motion for an order to show cause why Donius/RMCA should not be held in contempt for violating a preliminary injunction. (ECF No. 83-2). At the tribal court proceeding, the tribal court judge stated, “When I gave that order, with all due respect . . . It was for everything. Everything was to cease and desist, period. I don't know how you or anyone else interpreted it. It was stop everything. That was my order.” (ECF No. 83-2 at 22). Mr. Corrales, counsel for Marvin Donius and RMCA, raised the issue of jurisdiction.

MR. CORRALES: Yes, I brought it up because they are going to interpret your statement that Your Honor made the original preliminary injunction had to do with not only no further building, but any activities on the property. And so what the Court is doing here is the Court is making a determination of regulatory jurisdiction as to what is going on in the property now.
THE JUDGE: There is no dispute. I've already made the comment.
MR. CORRALES: Okay.
THE JUDGE: This Court has jurisdiction. That's what we're arguing, rehashing.
MR. CORRALES: Yes. That is-
THE JUDGE: I already made that. It went to the Ninth Circuit. The Ninth Circuit says, you, Counsel, your side, has not exhausted its tribal remedies. So we're back in terms of ...

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