SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

478 

CA 12-01827 

PRESENT: PERADOTTO, J.P., LINDLEY, VALENTINO, AND WHALEN, JJ. 

 

 

SUE/PERIOR CONCRETE & PAVING, INC., 

PLAINTIFF-RESPONDENT, 

V OPINION AND ORDER

LEWISTON GOLF COURSE CORPORATION, SENECA 

NIAGARA FALLS GAMING CORPORATION, SENECA 

GAMING CORPORATION, JEFFREY L. GILL, MARK I. 

HALFTOWN, GLORIA HERON, MAURICE A. JOHN, SR., 

MICHAEL L. JOHN, KAREN KARSTEN, INA K. LOCKE, 

ROBERT E. MELE, RICHARD K. NEPHEW, MARIBEL 

PRINTUP, COCHISE N. REDEYE, GARY SANDEN, 

KEVIN W. SENECA, BARRY E. SNYDER, SR., AND 

STEVE TOME, DEFENDANTS-APPELLANTS, 

NIAGARA COUNTY INDUSTRIAL DEVELOPMENT AGENCY, 

DEFENDANT-RESPONDENT, 

ET AL., DEFENDANTS. 

 

PHILLIPS LYTLE LLP, BUFFALO (MICHAEL BRIAN POWERS OF COUNSEL), AND

HOBBS STRAUS DEAN & WALKER LLP, PORTLAND, OREGON (EDMUND C. GOODMAN,

OF THE OREGON AND WASHINGTON BARS, ADMITTED PRO HAC VICE, OF COUNSEL),

FOR DEFENDANTS-APPELLANTS. 

DUKE, HOLZMAN, PHOTIADIS & GRESENS LLP, BUFFALO (GREGORY P. PHOTIADIS

OF COUNSEL), FOR PLAINTIFF-RESPONDENT. 

 

Appeal from an order of the Supreme Court, Niagara County

(Catherine Nugent Panepinto, J.), entered March 1, 2012. The order

denied the motion of defendants-appellants to dismiss the first

amended complaint. 

It is hereby ORDERED that the order so appealed from is

unanimously modified on the law by granting the motion of defendantsappellants in part and dismissing the third cause of action and as

modified the order is affirmed without costs. 

Opinion by PERADOTTO, J.:

The central question on this appeal is whether defendant Lewiston

Golf Course Corporation (LGCC), a corporation formed under the laws of

the Seneca Nation of Indians (Nation or SNI), is protected by the

Nation’s sovereign immunity. Contrary to the contention of

defendants-appellants, we conclude that Supreme Court properly denied

that part of their motion seeking to dismiss the first amended
-2- 478 

CA 12-01827 

complaint against LGCC on sovereign immunity grounds inasmuch as LGCC

is not an “arm of the tribe” for purposes of sovereign immunity. We

conclude, however, that the court should have granted that part of

their motion seeking to dismiss the third cause of action, and thus

that the order should be modified accordingly.

I

This matter arises out of the construction of the Hickory Stick

Golf Course on a parcel of vacant land in the Town of Lewiston, New

York. Defendant Seneca Niagara Falls Gaming Corporation (SNFGC)

purchased the 250-acre parcel in 2006 from a private party on the open

market for $2.1 million. SNFGC is a wholly-owned subsidiary of

defendant Seneca Gaming Corporation (SGC), which, in turn, is wholly

owned by the Nation. In July 2007, SNFGC conveyed the parcel to LGCC,

a wholly-owned subsidiary of SNFGC created for the purpose of

developing and operating a golf course on the property. SGC, SNFGC,

and LGCC are all “corporation[s] . . . duly formed under the laws of

[SNI].” The Nation’s legislative body, the Council, appoints the

members of SGC’s board of directors, and the boards of SNFGC and LGCC

are comprised “solely of the members of the board of directors of

[SGC].”

In August 2007, LGCC contracted with plaintiff to construct an

“18-hole championship golf course with an associated driving range,

club house and pro shop” on the Lewiston property for the sum of $12.7

million. In connection with the project, LGCC applied for and

received over $1 million in tax breaks through agreements with

defendant Niagara County Industrial Development Agency (NCIDA). The

project had a substantial completion date of November 30, 2008, but it

was not completed until December 2, 2009. Upon the completion of

construction, plaintiff claimed that LGCC owed it $4.1 million for

extra work performed by plaintiff and for delay-related damages. LGCC

disputed the sums sought by plaintiff and refused to pay. As a

result, plaintiff filed a mechanic’s lien against the property in

February 2010 and thereafter commenced this action asserting causes of

action for foreclosure of the mechanic’s lien, breach of contract,

breach of the implied covenant of good faith and fair dealing, quantum

meruit, promissory estoppel, and fraud. LGCC, SNFGC, SGC, NCIDA, the

Niagara Mohawk Power Corporation, and various individuals were named

as defendants in the first amended complaint. 

Defendants-appellants, i.e., LGCC, SNFGC, SGC, and the individual

directors and/or officers thereof (hereafter, defendants), moved to

dismiss the first amended complaint against them on sovereign immunity

grounds, asserting that they are “entitled to the full protection of

the Nation’s sovereign immunity, which prevents the [c]ourt from

exercising jurisdiction over [them].” They further moved to dismiss

the third cause of action, for breach of the implied covenant of good

faith and fair dealing, and the sixth cause of action, for fraud, as

duplicative of the breach of contract cause of action. In support of

the motion, defendants submitted, inter alia, LGCC’s bylaws; minutes

from an August 2002 Council session enacting the charters of SNFGC and

SGC; minutes from a June 2007 Council session approving the creation
-3- 478 

CA 12-01827 

of the LGCC; certificates of existence for SNFGC, SGC and LGCC; and

LGCC’s Charter. 

In approving the creation of LGCC, the Council declared that the

“economic success of the Nation’s gaming operations is vitally

important to the economy of the Nation and the general welfare of its

members” and that, “in furtherance of the economic success of the

Nation’s gaming operations, [SNFGC] has commenced development of a . .

. golf course located in the Town of Lewiston, New York, including

related clubhouse, retail and food and beverage operations, at a total

projected cost of up to $20 million.” 

According to the Council:

“[T]he Lewiston Golf Course will be developed and

operated as an amenity to the SNFGC’s casino

operations, together with the casino’s lodging,

dining, retail and entertainment amenities, the

purpose of which amenities is to enhance the

overall success and profitability of the casino’s

operations consistent with the powers described in

SNFGC’s charter and the purposes for which SNFGC

was formed . . . [T]he use of a separate

corporation or legal entity to own and operate the

Lewiston Golf Course is advisable due to various

legal and accounting considerations, including the

status of the Lewiston Golf Course as an offterritory business venture of the Nation, subject

to legal, tax and other requirements that are not

applicable to the Nation’s on-territory business .

. . [T]he Nation desires to establish [LGCC] as a

separate legal entity, governmental

instrumentality of the Nation, and wholly-owned

subsidiary of SNFGC, for the purpose of developing

and operating the Lewiston Golf Course in the Town

of Lewiston, New York, and legally doing business

in such jurisdictions.”

The Council therefore authorized and directed SNFGC and LGCC “to

develop and implement legitimate tax strategies to minimize any tax

obligations of [LGCC], including, but not limited to, maximizing the

tax savings benefits offered by [NCIDA].”

LGCC’s Charter states that it was “organized for the purpose of

developing, constructing, owning, leasing, operating, managing,

maintaining, promoting and financing the Lewiston Golf Course on land

(currently owned by SNFGC as of the date of this Charter) in the Town

of Lewiston, New York.” According to the Charter, LGCC is “indirectly

owned by the Nation through [SGC] and its wholly-owned subsidiary,

SNFGC, and shall constitute a governmental instrumentality of the

Nation, having autonomous existence separate and distinct from the

Nation.” The Charter further provides that “the Nation shall not be

liable for the debts or obligations of [LGCC], and [LGCC] shall have

no power to pledge or encumber the assets of the Nation.”
-4- 478 

CA 12-01827 

Plaintiff opposed the motion, contending, inter alia, that LGCC

was not entitled to sovereign immunity. In opposition to the motion,

plaintiff submitted, inter alia, an October 2007 agent agreement

between NCIDA and LGCC; a Payment-in-Lieu of Taxes (PILOT)

agreement between NCIDA and LGCC; and a November 2007 lease and

leaseback agreement between NCIDA and LGCC. The agreements between

NCIDA and LGCC specify that they are governed by and enforced in

accordance with the laws of New York State, and that the parties agree

to submit to the personal jurisdiction of federal or state courts

located in Niagara County, New York. The PILOT agreement provides

that “[t]he parties hereto recognize that the purpose of the Project

is to create or retain permanent private sector jobs in Niagara

County,” and that LGCC would be obligated to pay only a portion of its

normal tax burden during the five-year term of the agreement.

NCIDA supported that part of defendants’ motion seeking to

dismiss the third and sixth cause of actions as duplicative of the

second cause of action, but opposed the motion insofar as it sought

dismissal of the first amended complaint against defendants on

sovereign immunity grounds. NCIDA asserted that LGCC, through its

predecessor Seneca Management Development Corporation (SMDC),

“consistently held [itself] out as a profit making corporation,

separate and independent from the [Nation].” According to NCIDA, in

applying for tax exemptions and deferrals relative to the golf course

project, LGCC did not “imply that it is an arm of the [Nation’s]

government or that it is entitled to the protections of sovereign

immunity. To the contrary, the application shows that the LGCC and

the SMDC are separate and independent for[-]profit corporations

intended to construct and operate a championship level golf course on

non[-] native land to support tourism in the Niagara Region.” NCIDA

thus contended that “LGCC is not entitled to the protections of

sovereign immunity afforded to the [Nation].”

NCIDA submitted, inter alia, an affidavit of its former assistant

director, and LGCC’s application for assistance in connection with the

project. The former assistant director averred that, when SMDC

representatives approached NCIDA to secure tax breaks for the golf

course project, they indicated “that the land and project would not be

considered part of the native territory, but instead would remain on

the tax rolls under the jurisdiction of the State of New York.” SMDC

“also indicated that the land would be owned, and the golf course

would be operated, by a for[-]profit corporation independent of

[SNI].” According to the former assistant director, SMDC “represented

that this project was intended to be a profit making venture outside

the compact territories[, and] held [itself] out as a separate and

independent profit making corporation.” NCIDA granted the project

partial real property tax abatements and sales and use tax exemptions

for purchases and rentals related to the acquisition, construction and

equipping of the golf course, which were worth an estimated $1

million.

In its application for assistance, SMDC stated that it was

“looking to create a championship level public/semi-private golf

course offering the millions of visitors of the Niagara Falls region
-5- 478 

CA 12-01827 

and the patrons of the Seneca Niagara Casino & Hotel a new tourist

destination project that will attract golf enthusiasts from Canada and

the United States and to capitalize on the growing tourist market,

which will create new jobs and allow for prolonged stays in the area.” 

It requested sales tax exemptions of $429,503 and real property tax

exemptions of $618,790.

The court denied defendants’ motion, concluding, inter alia, that

LGCC is not an “arm” of the Nation entitled to sovereign immunity

under the factors set forth in Matter of Ransom v St. Regis Mohawk

Educ. & Community Fund (86 NY2d 553, 558-560). This appeal ensued. 

Plaintiff has since withdrawn its claims against SGC, SNFGC, and the

individual defendants, so only LGCC is at issue on this appeal.

II

It is well settled that “Indian tribes are immune from lawsuits

in both state and federal court unless ‘Congress has authorized the

suit or the tribe has waived its immunity’ ” (Warren v United States,

859 F Supp 2d 522, 539, affd 2013 WL 1748957 [2d Cir 2013], quoting

Kiowa Tribe of Okla. v Manufacturing Tech., Inc., 523 US 751, 754; see

Breakthrough Mgt. Group, Inc. v Chukchansi Gold Casino & Resort, 629

F3d 1173, 1182, cert dismissed ___ US ___, 132 S Ct 64; see also

Ransom, 86 NY2d at 558-559). As particularly relevant here, “[t]ribes

enjoy immunity from suits on contracts, whether those contracts

involve governmental or commercial activities and whether they were

made on or off a reservation” (Kiowa Tribe of Okla., 523 US at 760;

see Allen v Gold Country Casino, 464 F3d 1044, 1046, cert denied 549

US 1231).

Less settled is the law governing whether, and to what extent,

economic entities created by a tribe share in the tribe’s immunity

from suit (see generally American Prop. Mgt. Corp. v Superior Court,

206 Cal App 4th 491, 500). “Tribal subagencies and corporate entities

created by the Indian Nation to further governmental objectives, such

as providing housing, health and welfare services, may also possess

attributes of tribal sovereignty, and cannot be sued absent a waiver

of immunity” (Ransom, 86 NY2d at 558-559; see Breakthrough Mgt. Group,

Inc., 629 F3d at 1183). The critical question is “whether the entity

acts as an arm of the tribe so that its activities are properly deemed

to be those of the tribe” (Allen, 464 F3d at 1046), i.e., whether the

entity is “so closely allied with and dependent upon the [t]ribe that

it is entitled to the protection of tribal sovereign immunity”

(Ransom, 86 NY2d at 560; see Gristede’s Foods, Inc. v Unkechuage

Nation, 660 F Supp 2d 442, 477).

Federal and state courts have articulated various factors to be

considered in evaluating whether a particular entity is an “arm” of a

tribal government for sovereign immunity purposes (see e.g. Warren,

859 F Supp 2d at 540, affd 2013 WL 1748957; Breakthrough Mgt. Group,

Inc., 629 F3d at 1187-1188; Gristede’s Foods, Inc., 660 F Supp 2d at

477-478; Ransom, 86 NY2d at 559; Seneca Niagara Falls Gaming Corp. v

Klewin Bldg. Co., Inc., 2005 WL 3510348, *3-5 [Conn]). In Ransom, the
-6- 478 

CA 12-01827 

New York Court of Appeals stated that, “[a]lthough no set formula is

dispositive, in determining whether a particular tribal organization

is an ‘arm’ of the tribe entitled to share the tribe’s immunity from

suit, courts generally consider such factors as whether: 

the entity is organized under the tribe’s laws or

constitution rather than Federal law; the

organization’s purposes are similar to or serve

those of the tribal government; the organization’s

governing body is comprised mainly of tribal

officials; the tribe has legal title or ownership

of property used by the organization; tribal

officials exercise control over the administration

or accounting activities of the organization; and

the tribe’s governing body has power to dismiss

members of the organization’s governing body . . .

More importantly, courts will consider whether the

corporate entity generates its own revenue,

whether a suit against the corporation will impact

the tribe’s fiscal resources, and whether the

subentity has the ‘power to bind or obligate the

funds of the [tribe]’ . . . The vulnerability of

the tribe’s coffers in defending a suit against

the subentity indicates that the real party in

interest is the tribe” (id. at 559-560 [emphasis

added]).

Factors cited by other courts include whether the tribe intended

to cloak the entities with sovereign immunity and whether the

fundamental purposes of tribal sovereign immunity, i.e., “promot[ing]

the goal of Indian self-government, including its overriding goal of

encouraging tribal self-sufficiency and economic development”

(Oklahoma Tax Commn. v Citizen Band Potawatomi Indian Tribe of Okla.,

498 US 505, 510 [internal quotation marks omitted]), are served by

extending immunity to the entities (see Breakthrough Mgt. Group, Inc.,

629 F3d at 1181; Dixon v Picopa Constr. Co., 160 Ariz 251, 258, 772

P2d 1104, 1111). “[C]ommon among these factors is that the tribal

entity operates ‘not as a mere business,’ . . . but rather as an

extension of the tribe’s own economic activity, ‘so that its

activities are properly deemed to be those of the tribe’ itself”

(Gristede’s Foods, Inc., 660 F Supp 2d at 478). Notably, “the burden

of proof for an entity asserting immunity as an arm of a sovereign

tribe is on the entity to establish that it is, in fact, an arm of the

tribe” (id. at 466).

III

As defendants correctly note, several federal and state courts

have determined that SGC and SNFGC are entitled to sovereign immunity

as subordinate arms or instrumentalities of SNI (see e.g. Warren, 859

F Supp 2d at 541 [“SGC is a governmental instrumentality entitled to

tribal immunity”]; Myers v Seneca Niagara Casino, 488 F Supp 2d 166,

168 n 2 [SNFGC “enjoys all of the privileges and immunities of the

Nation”]; Seneca Niagara Falls Gaming Corp., 2005 WL 3510348, at *6
-7- 478 

CA 12-01827 

[SNFGC “is a tribal entity entitled to tribal immunity”]). Defendants

contend that there is “no legally relevant distinction” between SGC,

SNFGC, and LGCC, and thus that LGCC is similarly protected by the

Nation’s sovereign immunity. We reject that contention. Applying the

Ransom factors and the general principles enunciated by the federal

courts and our sister states, we conclude that LGCC is not an “arm” of

the Nation and therefore falls outside the Nation’s cloak of sovereign

immunity (see generally Dixon, 160 Ariz at 252-259, 772 P2d at 1105-

1112).

As the court properly found, several of the Ransom factors weigh

in favor of extending sovereign immunity to LGCC. There is no

question that LGCC is “organized under the tribe’s laws or

constitution rather than Federal law” (id. at 559). Further, LGCC’s

“governing body is comprised mainly of tribal officials,” and “the

tribe’s governing body has power to dismiss members of the

organization’s governing body” (id.). LGCC’s board is comprised

“solely of the members of the board of directors of [SGC],” all of

whom are appointed by the Nation’s Council. SGC’s board consists of

between four and seven members, a supermajority of whom must be

enrolled members of the Nation. The Council may remove a board member

for cause “upon a recommendation of the majority of the [b]oard” or on

its own initiative with the votes of at least 10 members of the

Council. Moreover, the Nation “exercise[s] control over the

administration or accounting activities of [LGCC]” (id.). LGCC’s

Charter requires it to seek the Council’s “review and approval” before

engaging in any activities that “require a significant expenditure of

Company resources.” Similarly, although LGCC can give guarantees and

incur liabilities, “significant guarantees or liabilities shall be

subject to the approval of [the] Council.” Any contracts or

agreements with governmental entities must be approved by the Council. 

Further, “purchases of real property and significant expenditures of

personal property shall be subject to the approval of [the] Council.” 

LGCC is required to prepare quarterly reports and an annual report,

copies of which are provided to the Council, and the Nation may

inspect LGCC’s books, records, and property at all reasonable times.

Other factors, however, including what the Court of Appeals has

characterized as the “[m]ore important[]” financial factors, weigh in

favor of a determination that LGCC does not share in the Nation’s

sovereign immunity (id.). With respect to whether LGCC’s “purposes

are similar to or serve those of the tribal government” (id.), we

conclude that this factor supports the denial of sovereign immunity to

LGCC. In minutes from its August 2002 meeting approving the creation

of SGC, the Council declared that “it is . . . the policy of the

Nation to promote the welfare and prosperity of its members and to

actively promote, attract, encourage and develop economically sound

commerce and industry through governmental action for the purpose of

preventing unemployment and economic stagnation,” and that “the Gaming

industry is vitally important to the economy of the Nation and the

general welfare of its members.” To that end, the Council created

SNFGC for the purpose of “developing, financing, operating and

conducting the Nation’s gaming operations on its Niagara Falls

Territory at the Niagara Falls Gaming Facility.” In creating the
-8- 478 

CA 12-01827 

LGCC, the Council declared that, “in furtherance of the economic

success of the Nation’s gaming operations, [SNFGC] has commenced

development of a . . . golf course located in the Town of Lewiston,

New York[, which] will be developed and operated as an amenity to . .

. SNFGC’s casino operations, . . . the purpose of which amenities is

to enhance the overall success and profitability of the casino’s

operations” (emphasis added). In that manner, the Council believed

that the golf course project “may reasonably be expected to benefit,

directly or indirectly, the Nation” (emphasis added). Thus, the

Council’s own statements reflect that the purpose of LGCC – to develop

a golf course as an “amenity” to the Nation’s gaming operations – is

several steps removed from the purposes of tribal government, e.g.,

“promoting tribal welfare, alleviating unemployment, [and] providing

money for tribal programs” (Gristede’s Foods, Inc., 660 F Supp 2d at

477; cf. Ransom, 86 NY2d at 560).

The documents LGCC submitted to NCIDA in support of its request

for tax relief and other economic assistance further indicate that the

central purpose of the golf course project was not to provide funds

for traditional governmental programs or services but, rather, was to

serve as a regional economic engine (see generally Dixon, 160 Ariz at

258, 772 P2d at 1111). In the PILOT agreement, LGCC and NCIDA

explicitly recognized that the purpose of the project “is to create or

retain permanent private sector jobs in Niagara County” (emphasis

added). In its application for assistance, LGCC’s predecessor in

interest asserted that it was

“looking to create a championship level

public/semi-private golf course offering the

millions of visitors of the Niagara Falls region

and the patrons of the Seneca Niagara Casino &

Hotel a new tourist destination project that will

attract golf enthusiasts from Canada and the

United States and to capitalize on the growing

tourist market, which will create new jobs and

allow for prolonged stays in the area” (emphasis

added).

Notably absent is any reference to improving the quality of life on

reservation lands, creating jobs for Native Americans living on the

reservation, or generating funds to support educational, social, or

other government-related programs for tribal members. Indeed, even in

the construction of the golf course, LGCC pledged to use Niagara

County contractors and subcontractors (not tribal businesses) for the

project.

Moreover, contrary to the assertion of defendants, the record

establishes that LGCC, not the Nation, “has legal title or ownership

of” the golf course property (Ransom, 86 NY2d at 559). The only

alleged support for defendants’ assertion that the Nation “owns all of

[LGCC]’s improvements and assets, including the golf course property”

is the provision in LGCC’s Charter that, upon LGCC’s dissolution or

liquidation, its “remaining property and assets . . . shall be
-9- 478 

CA 12-01827 

distributed to SNFGC or, at the Nation’s direction, to one or more

organizations designated pursuant to a plan of distribution.” That

fact does not, however, establish legal title or ownership of the

property at issue. With respect to what defendants term the

“financial interconnectedness factors” (see id. at 559-560), we

conclude that such factors weigh against extending the Nation’s

sovereign immunity to LGCC. With respect to the Ransom financial

factors, we note that: (1) LGCC generates its own revenue; (2) there

is no evidence in the record (and there is significant evidence to the

contrary) that a suit against LGCC would impact the Nation’s fiscal

resources; and (3) LGCC does not have binding authority over the

Nation’s funds (see id.). In creating the LGCC, the Council stated

that it decided to form a “separate corporation or legal entity to own

and operate the Lewiston Golf Course . . . due to various legal and

accounting considerations, including the status of the Lewiston Golf

Course as an off-territory business venture of the Nation, subject to

legal, tax and other requirements that are not applicable to the

Nation’s on-territory businesses.” To that end, the Council

“authorized and directed” LGCC to “develop and implement legitimate

tax strategies to minimize any tax obligations of [LGCC], including,

but not limited to, maximizing the tax savings benefits offered by the

[NCIDA] and utilizing net operating losses, if any, incurred by the

Company, to offset the Company’s future profits.” Thus, unlike the

Nation itself or its closely-associated gaming entities, i.e., SNG and

SNFGC, LGCC was intended to function as a regular business entity,

with profits, losses, and legal and tax obligations applicable to any

other business operated outside the confines of an Indian reservation

by a non-native entity.

Further, LGCC’s Charter clearly provides that LGCC has no power

to bind or otherwise obligate the funds of the Nation, stating, inter

alia, that “[n]o activity of the Company nor any indebtedness incurred

by it shall encumber, implicate or in any way involve assets of the

Nation or another Nation Entity not assigned or leased in writing to

the Company”; “the Nation shall not be liable for the debts or

obligations of the Company, and the Company shall have no power to

pledge or encumber the assets of the Nation”; “[t]he Obligations of

the Company shall not be a debt of the Nation or of [SGC] or any other

Nation-chartered Gaming corporation”; and “[t]he Company shall not

have[] any power . . . to borrow or lend money on behalf of the

Nation, or to grant or permit or purport to grant or permit any right,

lien, encumbrance or interest in or on any of the assets of the

Nation” (see id. at 559). 

Moreover, the record is devoid of evidence that a lawsuit against

LGCC would adversely impact the Nation’s treasury either directly or

indirectly (see id. at 559-560). Unlike SGC, SNFGC, and other tribal

entities that are obligated to pay large sums to the Nation on a

regular basis (see Warren, 859 F Supp 2d at 541, affd 2013 WL 1748957

[“(Al)though a suit against SGC will not directly impact the Nation’s

fiscal revenues, a large judgment could render it unable to meet its

significant financial obligations to the SNI”]; Breakthrough Mgt.

Group, Inc., 629 F3d at 1194-1195 [casino required to pay up to $1

million each month to the tribe]), there is no evidence on this record
-10- 478 

CA 12-01827 

that LGCC is so obligated. Indeed, LGCC’s certificate of existence

states that “the corporation has no obligation to pay any franchise

taxes to [SNI].” Further, unlike the Nation’s heavily regulated

gaming operations, the revenue from which must only be used “to fund

tribal government operations or programs . . . [,] to provide for the

general welfare of the Indian tribe and its members . . . [,] to

promote tribal economic development . . . [,] to donate to charitable

organizations[,] or . . . to help fund operations of local government

agencies” (25 USC § 2710 [b] [2] [B]), there is no evidence that the

funds generated by the golf course project are earmarked for the

Nation in general or its governmental programs in particular (cf.

Breakthrough Mgt. Group, Inc., 629 F3d at 1195 [“(T)he evidence

reveals that the Tribe depends heavily on the Casino for revenue to

fund its governmental functions, its support of tribal members, and

its search for other economic development opportunities. One hundred

percent of the Casino’s revenue goes to the Authority and then to the

Tribe. Therefore, . . . any reduction in the Casino’s revenue that

could result from an adverse judgment against it would therefore

reduce the Tribe’s income”]).

Finally, we note that declining to extend sovereign immunity to

LGCC under the circumstances of this case will not diminish the

policies underlying tribal sovereign immunity. “Indeed, an Indian

tribe’s ability to create a legally distinct non-immune entity . . .

promotes commercial dealings between Indians and non-Indians by

allowing tribes to participate in commercial transactions without the

added complexity and expense that sovereign immunity concerns bring to

a transaction” (American Prop. Mgt. Corp., 206 Cal App 4th at 507-

508). Here, permitting LGCC to retreat behind the Nation’s cloak of

sovereign immunity after it held itself out as an independent, marketparticipating entity subject to the jurisdiction of the State of New

York, including its courts, would discourage non-Indians from entering

into business relationships with the Nation’s corporations, which “may

well retard [the Nation’s] economic growth” and undermine one of the

purposes of its sovereign immunity (Dixon, 160 Ariz at 259, 772 P2d at

1112). We thus conclude that the court properly denied that part of

defendants’ motion seeking to dismiss the first amended complaint

against LGCC on sovereign immunity grounds.

IV

We agree with defendants, however, that the court should have

granted that part of their motion seeking to dismiss plaintiff’s third

cause of action, which alleges breach of the implied covenant of good

faith and fair dealing, as duplicative of the breach of contract cause

of action inasmuch as the first amended complaint “fails to allege

defendants’ violation of a duty independent of the . . . agreement”

(Williams v Coppolla, 23 AD3d 1012, 1013, lv dismissed 7 NY3d 741; see

Makuch v New York Cent. Mut. Fire Ins. Co., 12 AD3d 1110, 1111). We

therefore modify the order accordingly.

Contrary to the further contention of defendants, however, we

conclude that the court properly denied that part of their motion

seeking to dismiss the sixth cause of action, which alleges fraud. 
-11- 478 

CA 12-01827 

Plaintiff stated a cause of action for fraudulent inducement

sufficient to withstand a motion to dismiss (see generally Deerfield

Communications Corp. v Chesebrough-Ponds, Inc., 68 NY2d 954, 956;

Wagner Trading Co. v Tony Walker Retail Mgt. Co., 277 AD2d 1012, 1012)

and, on this record, it cannot be determined whether the fraud cause

of action is merely duplicative of the breach of contract cause of

action (see generally Contacare, Inc. v CIBA-Geigy Corp., 49 AD3d

1215, 1216, lv denied 10 NY3d 714; Crawford Furniture Mfg. Corp. v

Pennsylvania Lumbermens Mut. Ins. Co., 244 AD2d 881, 881-882). 

V

Accordingly, we conclude that the order should be modified by

granting that part of defendants’ motion seeking to dismiss the third

cause of action and that the order should otherwise be affirmed. 

Entered: June 14, 2013 Frances E. Cafarell

Clerk of the Court