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Williams & Cochrane, LLP v. Quechan Tribe of the Fort Yuma Indian Reservation

United States District Court, S.D. California

September 10, 2019

WILLIAMS & COCHRANE, LLP; and FRANCISCO AGUILAR, MILO BARLEY, GLORIA COSTA, GEORGE DECROSE, SALLY DECORSE, et al., on behalf of themselves and all others similarly situated, Plaintiff,


          Hon. Gonzalo P. Curiel United States District Judge

         Plaintiff/Counter-Defendant Williams & Cochrane (“W&C”) is a law firm that specializes in Indian law. Defendant/Counter-Plaintiff Quechan Tribe of Fort Yuma Indian Reservation (“Quechan” or “the Tribe”) hired W&C to negotiate with the State of California on its behalf regarding the Tribe's gaming compact. After months of negotiations, Quechan terminated W&C, refused to pay any contingency fee, hired Defendants Richard Armstrong, Robert Rosette, Rosette & Associates, and Rosette, LLP (collectively, the “Rosette Defendants”), and subsequently demanded that W&C hand over the Tribe's case file.

         In this litigation, W&C sued Quechan for terminating W&C and refusing to pay the attorneys' fees W&C claims it is owed under their agreement. The Tribe filed counterclaims against W&C, contending that W&C's representation was deficient and that the firm has refused to turn over Quechan's case file as required by law. W&C initially responded by moving to strike Quechan's answer, and the Court denied that motion. W&C next sought to dismiss Quechan's counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(1), for lack of jurisdiction and Rule 12(b)(6) for failure to state a claim. The Court again denied that motion on the basis that (1) Quechan had sufficiently alleged an injury and causation to establish Article III standing; and (2) W&C's 12(b)(6) arguments were procedurally improper because they were not raised in its prior Rule 12(f) motion to strike. On December 10, 2018, W&C filed an answer to the Tribe's counterclaims that contained a “reply claim” for tortious breach of contract against the Quechan, Keeny Escalanti, Sr., and Mark White II (collectively, the “Quechan Defendants”). ECF No. 179 at 6.

         Now before the Court is the Quechan Defendants' motion to dismiss W&C's “Reply claim” in Plaintiff's answer to the Tribe's counterclaims pursuant to Rule 12(f) and 12(b)(6). ECF No. 184. For the reasons stated below, the Court GRANTS the Quechan Defendants' Motion to Dismiss Plaintiffs' ‘Reply Claim.'


         I. Factual Background

         a. Quechan Hires W&C for Compact Negotiations

         The following factual allegations are taken from Quechan's Counterclaims and the facts alleged in W&C's “reply claim.” Quechan is a federally-recognized Indian tribe located along the Colorado River. ECF No. 94 ¶¶ 14, 20. Its operations and the majority of the reservation land is in California. Id. ¶ 20. The Tribe negotiated gaming compacts with the State of California in 1998 and 2006. Id. ¶ 22. In the summer of 2016, the Tribal Council of Quechan sought representation to reduce its payment obligations to the State under the compact amendment it had signed in 2006 (“2006 Amendment”). Id. ¶ 23. The Tribe had owed approximately $4 million to the State under that amendment. Id. ¶ 3. After another tribe successfully reduced the underpayments that it owed to the State, Quechan's Tribal Council contacted W&C, a law firm in California. Id. ¶¶ 16, 24. Cheryl Williams and Kevin Cochrane are attorneys at W&C.

         In September 2016, the Tribe hired W&C for representation in gaming compact negotiations and for resolution of the Tribe's underpayments. Subsequently, the parties executed an Attorney-Client Fee Agreement. Id. ¶ 25. The Fee Agreement provided that the Tribe would pay W&C a fixed monthly fee of $50, 000 for its services as well as a separate contingency fee structure dependent on the monetary reduction of its underpayments and the successful execution of a new gaming compact. Id. ¶ 26. The Fee Agreement also provided that the Tribe could terminate its relationship with W&C at any time. Id. In addition, the Fee Agreement dictated that the Tribe may have access to its case file upon request at any reasonable time, and that at the end of the engagement, the Tribe may request the return of its case file. Id.

         b. Q&C Begins Negotiations with California as Quechan's Counsel

         The initial compact negotiations between Quechan and the State began on November 9, 2016. Id. ¶ 27. On December 6, 2016, the State provided to W&C an initial discussion draft of a gaming compact for the Tribe. On December 14 and December 28, 2017, Ms. Williams sent the draft compact to Michael Jackson, Sr., who was then President of Quechan. Id. ¶ 29. W&C asserted that the draft compact was “as good as it can get from a financial perspective” and that the “vast majority of the draft compact was boilerplate.” Id.

         On January 11, 2017, Ms. Williams sent the State a letter requesting that they and the California Gambling Control Commission (“CGCC”) refrain from enforcing the Tribe's payments obligations under the 2006 Amendment, i.e. the underpayments. Id. ¶ 31. On January 18, 2017, the State responded that it did not have the legal authority to excuse the Tribe's payment obligations. Id. ¶ 31. Afterwards, W&C met with the State on January 31, 2017, for further negotiations. Id. ¶ 32. As of that date, W&C had not provided a revised draft to the State in response to the State's December 6, 2016 initial discussion draft. Id. In an email dated February 3, 2017, Ms. Williams claimed that W&C had the legal and textual authority to support the Tribe making reduced payments to the State under the 1999 compact terms. Id. ¶ 33. Ms. Williams also stated that California agreed to increase Quechan's gaming machine limit by 100, but other issues would take some time to iron out and W&C would work hard to redline the draft compact. Id.

         At some point near the end of March or beginning of April 2017, Ms. Williams sent a letter to the Tribal Council asserting that W&C had done its best to buy time to keep the December draft compact offer on the table. Id. ¶ 34. W&C further reported to the Tribe that negotiations with the State would continue and that the CGCC sought the payments that the Tribe owed. Id. Quechan alleges that W&C did very little or no work at all between December 2016 to that time. Id. Quechan further alleges that W&C made this representation to induce the Tribe into maintaining its relationship with W&C and force the Tribe to continue paying the fixed monthly legal fees required under the attorney-client agreement. Id.

         On April 13, 2017, Ms. Williams emailed the State a revised draft compact. Id. ¶ 35. This draft was nearly identical to the State's December 2016 draft. Id. In May 2017, the State and W&C exchanged compact drafts. Id. ¶ 36. On June 9, 2017, Mr. Cochrane emailed the CEO of Quechan's casinos and explained that the compact would be ready to sign within the following week. Id. ¶ 37. Quechan alleges that this statement was not true, as the State was not ready to sign any draft of the compact in existence at that time. Id.

         W&C and the State met on June 14, 2017. Id. ¶ 38. W&C sent the State a revised compact draft on June 21, 2017. Id. This was not a final draft and the State was not prepared to sign it. This draft did not address the underpayment issue; furthermore, there was a litany of other unresolved issues. Id. According to W&C, however, this version was near-final and was based on the State's offer for a twenty-five year gaming contract that would dispense with all revenue sharing aside from costs that would simply cover the tribe's pro rata share for Indian gaming regulation by the State. ECF No. 179 at 4. In addition, W&C asserts that the tribe and firm would meet on or about June 30, 2017 so that the Tribe could sign and execute the compact. Id.

         c. Quechan Has Concerns with W&C and Hires New Counsel

         Back in April 2017, the Quechan Tribal Council reviewed the status of the negotiations and W&C's work. ECF No. 94 ¶ 39. It was clear to the Tribal Council that W&C was not diligently pursuing negotiations and that W&C was having difficulties in the negotiations. Id. W&C had recommended retaining a lobbyist in Sacramento, for an additional fee, to assist getting the compact approved. Id. The Tribal Council was also concerned with the fact that the underpayment issue was unresolved, as the drafts exchanged to that point did not deal with that issue. Id.

         Based on these concerns, coupled with Quechan's fixed payment of $50, 000 a month to Q&C, the Tribal Council started to explore the possibility of hiring new counsel to replace W&C. Id. ¶ 40. Because the Tribal Council was dissatisfied with W&C's fees and performance, it invited Robert Rosette, and Indian law attorney, to discuss the possibility of Rosette, LLP (Mr. Rosette's firm) representing the Tribe in compact negotiations. Id. ¶ 43. After meeting with Mr. Rosette, the Tribal Council hired him on June 26, 2017. Id.

         d. Aftermath of W&C's Termination

         Also on June 26, 2017, Quechan President Escalanti sent W&C a letter terminating the firm's representation. Id. ¶ 44. In this letter, Escalanti asked W&C to transmit the Tribe's entire case file and most recent draft compact to its new counsel, Rosette LLP. ECF No. 94 ¶ 44. Escalanti further explained that the Tribe would not pay any contingency fee or additional reasonable fee in lieu for the legal services provided. Escalanti's letter stated that the W&C had failed to produce better-than-boilerplate terms in its negotiations with the State and appeared not to have dedicated the amount of time and labor that would justify monthly flat fee that had been paid. ECF No. 179 at 3-4. In addition, Escalanti noted that that confidentiality provisions of the Attorney-Client Fee Agreement would prevent W&C from disclosing any aspects of the matter to “any employee, officer, or official of the tribe or any subdivision agency, or ...

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