United States District Court, S.D. California
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,
QUECHAN TRIBE OF THE FORT YUMA INDIAN RESERVATION; ROBERT ROSETTE; ROSETTE & ASSOCIATES, PC; ROSETTE, LLP; RICHARD ARMSTRONG; KEENY ESCALANTI, SR.; MARK WILLIAM WHITE II, a/k/a WILLIE WHITE; and DOES 1 THROUGH 100, Defendant.
ORDER (1) GRANTING QUECHAN DEFENDANTS' MOTION TO
DISMISS PLAINTIFFS' REPLY CLAIM [ECF Nos. 184]
Gonzalo P. Curiel United States District Judge
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
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.
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'
Quechan Hires W&C for Compact Negotiations
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.
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.
Q&C Begins Negotiations with California as Quechan's
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.”
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.
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.
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.
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.
Quechan Has Concerns with W&C and Hires New
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.
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.
Aftermath of W&C's Termination
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,