Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-86-02527/USCOURTS-ca10-86-02527-0/pdf.json

Parties Involved:
Knowlton H. Brown
Appellee
Washoe Housing Authority
Appellant

Document Text:

PUBLISHED 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

KNOWLTON H. BROWN, d/b/a 

KNOWLTON H. BROWN CONSTRUCTION CO., 

Plaintiff-Appellee, 

v. 

WASHOE HOUSING AUTHORITY, 

Defendant-Appellant. 

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FILED 

United States Court of Appeals T~l'lth Circuit 

JAN 04 1988 

ROBERT L. HOOCKER 

Clerk 

No. 86-2527 

Appeal from the United States District Court 

for the District of Utah 

D.C. No. C-85-647-G 

Dale T. White (James M. O'Reilly, of Gardnerville, Nevada, and 

LeRoy S. Axland and Michael w. Homer, of Suitter, Axland, 

Armstrong & Hanson, of Salt Lake City, Utah, with him on the 

briefs), of Fredericks & Pelcyger, of Boulder, Colorado, for the 

Defendant-Appellant. 

Wilford A. Beesley (Jack Fairclough, of Salt Lake City, Utah, with 

him on the brief), of Salt Lake City, Utah, for the PlaintiffAppellee. 

Before McKAY, MOORE, and TACHA, Circuit Judges. 

TACBA, Circuit Judge. 

Appellate Case: 86-2527 Document: 01019290264 Date Filed: 01/04/1988 Page: 1 
The Washoe Housing Authority appeals from the district 

court's denial of a motion to dismiss this diversity suit pending 

consideration by the appropriate tribal forum. The Supreme 

Court's recent decision in Iowa Mutual Insurance Co. ~LaPlante, 

107 S. Ct. 971 (1987), decided after the district court's ruling, 

instructs that the federal courts should not consider a suit 

arising from activities on tribal land until the plaintiff has 

exhausted his or her tribal court remedies. We therefore reverse. 

The Washoe Tribe is a federally recognized tribe located in 

Nevada and California. In 1963, the tribe created the Washoe 

Housing Authority (Washoe) to provide low income housing on tribal 

lands. Brown Construction Co., a Utah corporation, entered into a 

contract with Washoe in 1979 to construct low-cost housing on 

tribal lands in Nevada. Brown filed this suit in federal district 

court in Utah in 1985, alleging that Washoe had breached and 

improperly managed the contract and thus caused Brown additional 

and unnecessary costs. 

Washoe challenged the jurisdiction of the court on several 

grounds. Washoe first filed motions challenging the personal 

jurisdiction of the court in Utah and moving for a change of 

venue. The district court denied these motions. Brown v. Washoe 

Housing Auth., 625 F. Supp. 595 (D. Utah 1985). Washoe then filed 

a motion to dismiss based on sovereign immunity and the absence of 

subject matter jurisdiction. The district court held that Washoe 

had waived its tribal immunity and that there is diversity 

jurisdiction under 28 U.S.C. § 1332. 

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Appellate Case: 86-2527 Document: 01019290264 Date Filed: 01/04/1988 Page: 2 
Washoe appeals from the district court's holding that 

diversity jurisdiction exists in this case. Washoe contends that 

the exclusive forum for this suit is the Washoe Tribal Court, 

which has "subject matter jurisdiction over all civil causes of 

action" arising within its territorial jurisdiction. Washoe Tribe 

of Nev. and Cal. Law and Order Code 1-20-020. Washoe thus asserts 

that the federal courts have no diversity jurisdiction in this 

case. 

In Iowa Mutual, the Supreme Court considered whether "a 

federal court may exercise diversity jurisdiction before the 

tribal court system has an opportunity to determine its own 

jurisdiction." 107 S. Ct. at 974. The Court had previously held 

that a federal court, as a matter of comity, should not exercise 

federal question jurisdiction over a case arising from activities 

on a reservation until tribal remedies are exhausted. National 

Farmers Union Ins. Co. ~Crow Tribe, 105 s. Ct. 2447, 2454 

(1985). The Court in Iowa Mutual held that principles of comity 

also demand that tribal remedies be exhausted before a claim based 

on diversity of citizenship is addressed by a federal court. The 

Court emphasized "the Federal Government's longstanding policy of 

encouraging tribal self-government" and the vital role that tribal 

courts play in tribal self-government. 107 S. Ct. at 975-76. The 

Court determined that "unconditional access to the federal forum 

would place it in direct competition with the tribal courts, 

thereby impairing the latter's authority over reservation 

affairs." Id. at 977. The Court thus concluded that "the federal 

policy supporting tribal self-government directs a federal court 

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Appellate Case: 86-2527 Document: 01019290264 Date Filed: 01/04/1988 Page: 3 
to stay its hand in order to give the Tribal Court a 'full 

opportunity to determine its own jurisdiction.'" Id. (quoting 

National Farmers Union, 105 s. Ct. at 2454). 

Since Iowa Mutual was decided, several courts have held that 

a federal court must defer to tribal court remedies as a matter of 

comity. See United States v. Turtle Mountain Housing Auth., 816 

F.2d 1273, 1276-77 (8th Cir. 1987) (dismissing suit brought by 

tribal member against tribal housing authority); Wellman~ 

Chevron U.S.A., Inc., 815 F.2d 577, 578-79 (9th Cir. 1987) 

(dismissing suit brought by tribal member against contractor); 

Snowbird Constr. Co. ~United States, 666 F. Supp. 1437, 1444 (D. 

Idaho 1987) (dismissing suit ~rought by contractor against tribal 

housing authority). We agree with these courts and hold that the 

considerations of comity relied upon in Iowa Mutual require Brown 

to exhaust its tribal remedies before a federal court will 

consider this case. 

Brown argues that Iowa Mutual does not resolve this case. 

Brown contends that the "sue and be sued" clause in its contract 

with Washoe supports federal diversity jurisdiction. As the 

district court observed, however, federal jurisdiction cannot be 

established by consent. See Weeks Constr., Inc. ~Oglala Sioux 

Housing Auth., 797 F.2d 668, 671 (8th Cir. 1986). Brown also 

cites several cases that allegedly show that a federal court may 

exercise diversity jurisdiction in a case involving the activities 

of a non-Indian on a reservation. Without deciding whether these 

decisions support Brown, we note that the exhaustion of tribal 

remedies is required as a matter of comity, not because there is 

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Appellate Case: 86-2527 Document: 01019290264 Date Filed: 01/04/1988 Page: 4 
no subject matter jurisdiction. Indeed, the Supreme Court 

reversed the Ninth Circuit's dismissal for lack of subject matter 

jurisdiction in Iowa Mutual, holding instead that the tribal 

courts should first consider the case as a matter of comity. 107 

S. Ct. at 978-79; see also Wellman, 815 F.2d at 578 ("The 

[district court's] ruling was correct though based upon the wrong 

reason. The dismissal should have been based on comity, rather 

than lack of subject matter jurisdiction."). 

The district court based its finding of subject matter 

jurisdiction upon a determination that Congress intended to apply 

the diversity statute in cases involving the United States Housing 

Act of 1937, ch. 896, 50 Stat. 888 (codified as amended 42 u.s.c. 

S 1437). The Washoe Housing Authority was established pursuant to 

federal regulations implementing the Housing Act. See 24 C.F.R. S 

905.101, 109. The district court relied upon the congressional 

objectives underlying the Housing Act as evidence of an intent to 

create diversity jurisdiction. In Iowa Mutual, however, the 

Supreme Court stressed that tribal sovereignty includes tribal 

authority over all of the activities of non-Indians on reservation 

lands. 107 S. Ct. at 978. Therefore, "[c]ivil jurisdiction over 

such activities presumptively lies in the tribal courts unless 

affirmatively limited by a specific treaty provision or federal 

statute." Id. There is no specific provision in the Housing Act 

limiting tribal court jurisdiction. The "general purposes" of 

that act are far from the express congressional command necessary 

to restrict tribal jurisdiction. We therefore disagree with the 

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Appellate Case: 86-2527 Document: 01019290264 Date Filed: 01/04/1988 Page: 5 
• 

district court that Congress has acted to confer diversity 

jurisdiction in this case. 

We do not dismiss this suit at this time. "On remand, the 

District Court should consider whether, on the facts of this case, 

the federal action should be stayed pending further Tribal Court 

proceedings or dismissed under the prudential rule announced in 

National Farmers Union." Iowa Mutual, 107 S. Ct. at 979 n.l4. 

Once the tribal courts have acted, their determination of 

jurisdiction is subject to review in federal court. Id. at 978; 

accord Wellman, 815 F.2d at 578; Turtle Mountain Housing Auth~, 

816 F.2d at 1277 n.2; Snowbird Constr. Co., 666 F. Supp. at 1444. 

REVERSED AND REMANDED. 

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Appellate Case: 86-2527 Document: 01019290264 Date Filed: 01/04/1988 Page: 6