97-092

 No. 97-092

 IN THE SUPREME COURT OF THE STATE OF MONTANA

 

1997

JAMES V. KRAUSE and DOLORES R. KRAUSE,

 Plaintiffs and Appellants,

 v.

DAN NEUMAN and RITA NEUMAN,

 Defendants and Respondents.

APPEAL FROM: District Court of the Fourth Judicial District,

 In and for the County of Missoula,

 The Honorable Douglas G. Harkin, Judge presiding.

COUNSEL OF RECORD:

 For Appellants:

 Jon G. Beal; Datsopoulos, MacDonald & Lind, Missoula, Montana

 Michael G. Black; Lukins & Annis, Spokane, Washington

 For Respondents:

 William C. Watt, Sara J. Johnson; Mullendore, Tawney & Watt, 

 Missoula, Montana

 Submitted on Briefs: August 14, 1997

 Decided: September 9, 1997

Filed:

 __________________________________________

 Clerk

Justice W. William Leaphart delivered the Opinion of the Court.

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 Appellants, James V. Krause and Delores R. Krause (the Krauses) appeal from the

December 10, 1996 order of the Montana Fourth Judicial District Court, Missoula

County, dismissing their amended complaint for lack of subject matter jurisdiction. 

We

affirm.

 We restate the issues raised on appeal as follows:

 1) Under federal statutory law, is jurisdiction to adjudicate interests in 

Indian trust

lands vested in federal courts to the exclusion of state courts?

 2) Does resolution of the Krauses' claims of breach of contract, tortious

misrepresentation, and fraudulent inducement require a determination of rights 

involving

Indian trust lands over which the state District Court has no subject matter 

jurisdiction?

Factual and Procedural Background

 Respondent Dan Neuman is an enrolled member of the Confederated Salish and

Kootenai Tribes (the Tribes). He has a beneficial interest in two tracts of Indian

allotment land located within the exterior boundaries of the Flathead Indian 

Reservation. 

The United States holds title to the two tracts, which cover approximately 1.46 

acres, in

trust for the benefit of Mr. Neuman. Since their allotment, the two tracts have been

transferred three times: from the original allottees to the Tribes, from the Tribes 

to Mr.

Neuman's mother, Josephine Neuman, and from Josephine to her son. All of these

transfers were made with the approval of the Bureau of Indian Affairs (BIA) pursuant 

to

federal statute.

 In May 1996, desiring to sell his land and the house situated thereon, Mr. 

Neuman

sought the assistance of the Division of Lands of the Tribes, which processes all

documents for the conveyance of trust land on the Flathead Reservation, to advertise 

the

sale of the trust property. In June 1996, the Division of Lands and the BIA began

working to clear title to the two tracts of land so that Mr. Neuman could transfer 

his

interest outside of the Tribes. Mr. Neuman also listed the property with a Missoula 

real

estate agent. 

 The Krauses are residents of the state of Washington. While visiting their

daughter in Missoula, Montana, they saw Mr. Neuman's listing in a Missoula real 

estate

brochure. The Krauses were interested in finding a retirement home near Missoula and

contacted the listing agent. The Krauses proceeded to negotiate with the agent to

purchase Mr. Neuman's trust property and eventually signed a standard buy-sell

agreement. The handwritten portion of the agreement gave the Krauses the option of

purchasing "in trust or patented." Mrs. Krause is an enrolled member of the Turtle

Mountain Chippewa Tribe, Pembina Band, so the Krauses first sought to purchase the

land in trust. However, upon being informed by the Tribes that it would not 

recognize

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Mrs. Krause as an Indian eligible to purchase the land in trust, the Krauses decided 

to

purchase the land in fee. The parties dispute whether the Krauses were ever made 

aware

that the federal government would have to approve the sale in fee and issue a patent

before the land could be transferred. However, in a counter-offer that amended the 

buysell agreement, the Krauses required that the seller "help arrange to transfer 

property

from trust to deeded status." 

 Both parties made considerable efforts and expenditures to consummate the sale. 

However, at the time of contracting, neither party, the Tribes' Division of Lands, 

nor the

BIA knew that title to the two tracts was seriously clouded. The Tribes had 

acquired the

land through an order issued by the Secretary of the Interior, which transferred the 

land

from the non-consenting heirs of the original allottee, and the validity of the 

order was

being questioned. In an affidavit dated January 26, 1996, the Superintendent of the

Flathead Agency of the BIA stated that the Agency had been working to clear the title

defect since July 1994, "and efforts to clear title continue." Three months after 

the

agreement was signed, Mr. Neuman informed the listing agent that he wished to

terminate the sale as it was apparent that the federal government would not approve 

the

transfer of the trust property anytime soon.

 The Krauses filed a complaint in the Montana Fourth Judicial District alleging

breach of contract, constructive fraud, and fraudulent inducement. The Krauses 

prayed

for specific performance or contract damages. The Neumans filed a motion to dismiss

and supporting brief arguing that the District Court lacked subject matter 

jurisdiction over

a contract action involving the sale of land located on the Flathead Indian 

Reservation and

that the Tribes assert exclusive jurisdiction over trust land disputes. The next 

day, the

Krauses filed an amended complaint adding fraud and negligent misrepresentation 

claims

and deleting any prayer for specific performance. The Neumans renewed their motion

to dismiss.

 Subsequently, the District Court converted the Neumans' motion to dismiss into

a motion for summary judgment pursuant to Rule 56, M.R.Civ.P. Both parties were

allowed to submit proof of additional facts. The District Court referred the 

matter to a

special master for oral argument on the following issues:

 1) Whether the District Court lacks subject matter jurisdiction to hear the

 issues presented in the complaint;

 2) Whether the contract claims presented by the Krauses are null and void

 as a matter of law; and

 3) Whether the Krauses failed to name the United States as an indispensable

 party to the action in their complaint.

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After hearing oral argument, the special master found that the claims alleged by the

Krauses had a substantial nexus to Mr. Neuman's allotment of Indian trust land and 

that,

therefore, federal law precluded the District Court from exercising jurisdiction. 

The

special master further found that state court jurisdiction would interfere with the 

Tribes'

right to self-governance. 

 The Krauses filed an objection to the special master's report; however, on

December 10, 1996, the District Court issued an order affirming the special master's

report and dismissing the action without prejudice for lack of subject matter 

jurisdiction. 

The court applied the test laid out in State ex rel. Iron Bear v. District Court of 

the

Fifteenth Judicial Dist. (1973), 162 Mont. 335, 512 P.2d 1292, and determined it was

precluded by federal law, specifically 28 U.S.C. 1353 and 1360, from exercising

jurisdiction. The court reasoned that it could not decide the Krauses' breach of 

contract

and tort claims without determining whether Mr. Neuman owned the land in fee or in

trust and whether he had the ability to transfer his interest. 

Standard of Review

 We review a district court's grant of summary judgment de novo. Motarie v.

Northern Montana Joint Refuse Disposal Dist. (1995), 274 Mont. 239, 242, 907 P.2d

154, 156. Thus, we apply the standards set forth in Rule 56, M.R.Civ.P., to 

determine

that no material issues of fact exist and that the movant is entitled to summary 

judgment

as a matter of law. Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900

P.2d 901, 903. 

Discussion

 Because Congress has plenary and exclusive powers to regulate Indian affairs, a

state court's subject matter jurisdiction over such affairs is limited to that 

explicitly

allowed by Congress. Bryan v. Itasca County (1976), 426 U.S. 373, 96 S.Ct. 2102, 48

L.Ed.2d 710. Further, the U.S. Supreme Court has recognized that Indian tribes are 

selfgoverning entities and, "until Congress acts, the tribes retain their existing 

sovereign

powers." U.S. v. Wheeler (1978), 435 U.S. 313, 323, 98 S.Ct. 1079, 1086, 55

L.Ed.2d 303, 313. Thus, in determining whether the District Court properly dismissed

for lack of subject matter jurisdiction, we must consider the interests of the 

federal and

tribal courts in adjudicating disputes involving Indian affairs. 

 In Iron Bear, this Court held that before a district court can assume 

jurisdiction

over any matters involving Indian affairs, "it must find subject matter jurisdiction 

by

determining: (1) whether the federal treaties and statutes applicable have preempted 

state

jurisdiction; (2) whether the exercise of state jurisdiction would interfere with 

reservation

self-government; and (3) whether the Tribal Court is currently exercising 

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jurisdiction or

has exercised jurisdiction in such a manner as to preempt state jurisdiction." Iron 

Bear,

512 P.2d at 1299. If the court finds that assuming jurisdiction over a dispute 

involving

Indian affairs is preempted by federal law or that assuming jurisdiction will 

interfere with

the Tribes' right to govern or to resolve the dispute, it has no subject matter 

jurisdiction

over the dispute. Geiger v. Pierce (1988), 233 Mont. 18, 758 P.2d 279.

 In its order, the District Court found that two federal statutes, 28 U.S.C. 

1360

and 1353, preempt state court jurisdiction in this case. The Neumans also argue 

that state

court jurisdiction over this action would impermissibly interfere with tribal selfgovernment. However, because we agree with the District Court's finding that federal

statutes preclude state subject matter jurisdiction, we will limit discussion to the 

first part

of the Iron Bear test.

 1. Under federal statutory law, is jurisdiction to adjudicate interests in

 Indian trust lands vested in federal courts to the exclusion of state courts?

 

 The General Allotment Act of 1887, ch. 119, 1, 24 Stat. 388 (1887), provided

the statutory framework by which certain Indian lands were first designated for 

allotment. 

Each allotment had to be approved by the Secretary of the Interior and would then be

held in trust by the United States for the benefit of the individual Indian 

allottee. The

1887 Act provided that at the expiration of the trust period, the United States would

convey the trust land by patent in fee to the allottee. General Allotment Act, ch. 

119, 

1, 24 Stat. 388 (1887). 

 Today, the General Allotment Act is codified at 25 U.S.C. 331-58. Under the

Act, an allottee wishing to transfer his or her interest in Indian trust land before 

the

expiration of the trust period must have the approval of the Secretary of the 

Interior, 25

U.S.C. 405, 483, and any conveyance of land, or contract concerning the same,

without this approval is "null and void." 25 U.S.C. 348. The Allotment Act also

creates a cause of action in the federal district court for those claiming an 

interest under

the Act. 25 U.S.C. 345. This section states:

 All persons who are in whole or in part of Indian blood or descent who are

 entitled to an allotment of land under any law of Congress, or who claim

 to be so entitled to land under any allotment Act or under any grant made

 by Congress, or who claim to have been unlawfully denied or excluded

 from any allotment or any parcel of land to which they claim to be lawfully

 entitled by virtue of any Act of Congress, may commence and prosecute or

 defend any action, suit, or proceeding in relation to their right thereto in the

 proper district court of the United States. 

25 U.S.C. 345.

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 The Supreme Court has held that this language vests exclusive jurisdiction in

federal courts to determine disputes involving allotments. See U.S. v. Mottaz 

(1986),

476 U.S. 834, 106 S.Ct. 2224, 90 L.Ed.2d 841; McKay v. Kalyton (1907), 204 U.S.

458, 27 S.Ct. 346, 51 L.Ed. 566 (interpreting the predecessor statute to 25 U.S.C. 

345). In Mottaz, the Court stated that 345 grants federal district courts subject 

matter

jurisdiction over two types of cases: (1) suits seeking the issuance of an 

allotment; and

(2) suits involving "the interest and rights of the Indian in his allotment or 

patent after

he has acquired it." Mottaz, 476 U.S. at 845 (quoting Scholder v. U.S. (9th Cir. 

1970),

428 F.2d 1123, 1129, cert. denied (1970), 400 U.S. 942, 91 S.Ct. 240, 27 L.Ed.2d 

246). 

The Ninth Circuit has also interpreted this statute as giving federal district 

courts subject

matter jurisdiction over suits involving ownership, title, or other rights 

appurtenant to title

in allotted land. Pinkham v. Lewiston Orchards Irr. Dist. (1988), 862 F.2d 184;

Christensen v. U.S. (9th Cir. 1985), 755 F.2d 705; Loring v. U.S. (9th Cir. 1979), 

610

F.2d 649. 

 Another statutory basis for federal court jurisdiction over disputes involving

allotted lands is found in Title 28, which encompasses district court jurisdiction. 

See 28

U.S.C. 1353. Section 1353 states that "[t]he district courts shall have original

jurisdiction of any civil action involving the right of any person, in whole or in 

part of

Indian blood or descent, to any allotment of land. . . ." 28 U.S.C. 1353. One 

circuit

has held that this statute was enacted for the limited purpose of giving district 

courts

jurisdiction over any claims of right of original allotments or allotments in the 

first

instance. Dry Creek Lodge, Inc. v. U.S. (10th Cir. 1975), 515 F.2d 926. However,

the special master found this interpretation inconsistent with the U.S. Supreme 

Court's

holding in McKay, 204 U.S. at 458. In that case, the Court held that state courts 

have

no jurisdiction over "controversies necessarily involving a determination of the 

title and

incidentally of the right to the possession, of Indian allotments while the same 

were held

in trust by the United States." McKay, 204 U.S. at 468. We recognize that 25 U.S.C.

 345 and 28 U.S.C. 1353 both provide for federal jurisdiction over disputes 

involving

claims of right or title to allotted lands to the exclusion of state courts. 

 The District Court also held that 28 U.S.C. 1360 preempted its jurisdiction. 

The

land at issue is located on the Flathead Indian Reservation, the only reservation 

over

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which the state of Montana has subject matter jurisdiction in "civil causes of action

between Indians or to which Indians are parties which arise in the areas of Indian

country." Pub. L. No. 280, 7, 67 Stat. 588, 590 (1953), codified as amended at 28

U.S.C. 1360. Though 28 U.S.C. 1360 allows state courts to exercise jurisdiction

over certain civil causes of action arising in Indian country, it provides:

 Nothing in this section shall authorize the alienation, encumbrance, or

 taxation of any real or personal property. . . belonging to any Indian or any

 Indian tribe, band, or community that is held in trust by the United States

 . . . ; or shall confer jurisdiction upon the State to adjudicate, in probate

 proceedings or otherwise, the ownership or right to possession of such

 property or any interest therein.

28 U.S.C. 1360. This Court has stated that "[a]ny state action that affects 

ownership

of Indian trust land is closely circumscribed by 28 U.S.C. 1360(b), even where 

state

jurisdiction has been acquired pursuant to P.L. 280." In re Marriage of Wellman 

(1993),

258 Mont. 131, 138, 852 P.2d 559, 563. We determine that "[o]n its face, this 

statute

precludes state jurisdiction to adjudicate any interest in Indian trust land." 

Marriage of

Wellman, 852 P.2d at 563.

 2. Does resolution of the Krauses' claims of breach of contract, tortious

 misrepresentation, and fraudulent inducement require a determination of

 rights involving Indian trust lands over which the state District Court has

 no subject matter jurisdiction?

 Having determined that federal statutory law preempts state subject matter

jurisdiction over actions involving title to an allotment, it is necessary to decide 

whether

a contract claim or a tort claim arising out of a contract for sale of allotted land 

is such

an action. The Ninth Circuit has held that in determining whether 25 U.S.C. 345 or

28 U.S.C. 1353 preempt state subject matter jurisdiction, "of critical 

importance . . .

are the claims advanced by plaintiffs." Pinkham, 862 F.2d at 187. The Krauses argue

that, as amended, their complaint states a simple contract and tort action arising 

off of

the reservation. They argue that "where the claims of the complaint are properly

characterized as one for damages sounding in tort, they are not related to the 

ownership

of title, or any rights appurtenant to an allotment, and subject matter jurisdiction 

cannot

exist in federal court."

 The U.S. Supreme Court, however, has held that state courts have no jurisdiction

over "controversies necessarily involving a determination of the title and 

incidentally

of the right to the possession" of Indian trust land. McKay, 204 U.S. at 468 

(emphasis

added). The District Court found that the Krauses' breach of contract and tort 

claims

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necessarily hinge on a determination of title to Indian trust land. The District 

Court

stated that:

 [e]ssential to proving Plaintiffs' [claims] . . . is a requirement that the

 district court determine that the Defendants owned the land in fee simple

 and thus resolve the claim to land as an Indian allotment. The right of

 possession of land, as well as the right to sell said land, necessarily involves

 a question of the existence of title. Plaintiffs' aforementioned claims of

 action cannot be separated from the issues of title to this property.

 

 We agree with the District Court's analysis. Count I of the Krauses' amended

complaint states that the Neumans failed to honor a contract to convey real 

property. 

They also claim that the Neumans "misrepresented their ability to offer for sale and

convey deeded property to the Krauses . . . and admittedly committed torts with 

respect

to their misrepresentations as to the status of the property and their ability to 

convey the

same." 

 The Krauses' pleadings therefore put at issue the Neumans' "ability to offer for

sale" and the "status" of the land. Further, the Neumans argue that under the 

Allotment

Act, they could not transfer an interest in Indian trust lands without the approval 

of the

Secretary of the Interior and that any contract to convey the same without such 

approval

is null and void. Thus, whether Mr. Neuman properly offered his land for sale, 

whether

a contract was formed, or whether the Neumans were justified in not performing the

contract are all issues that cannot be separated from questions of title to Indian 

trust

property. In the context of the claims advanced by the Krauses, the District Court

correctly found that it had no subject matter jurisdiction. 

 The Krauses also argue that because they amended their original complaint to

delete the prayer for specific performance, no interest in the trust property would 

be

affected by the District Court's adjudicating their claims. However, the state does 

not

acquire subject matter jurisdiction over Indian trust property simply because the 

plaintiff

seeks only money damages. In Marriage of Wellman, 852 P.2d at 559, the parties were

a married couple who lived on the Blackfeet Reservation and had accumulated

approximately 4,000 acres of Indian trust land. The legal title to the land was 

held by

the United States in trust for the benefit of Mrs. Wellman, a member of the Blackfeet

Tribe. Mrs. Wellman filed a petition for dissolution in state district court, and 

Mr.

Wellman sought an equitable distribution of real and personal property or, if the 

property

could not be distributed, a monthly award for his support, care, and maintenance from

the income produced by the property. Marriage of Wellman, 852 P.2d at 561. The

district court found that it had no jurisdiction to adjudicate the disposition of 

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the Indian

trust land.

 On appeal to this Court, Mr. Wellman recognized that "the District Court has no

authority to transfer title to the trust land to a non-Indian," but argued that the 

relief he

sought was a monetary share of the trust lands. Marriage of Wellman, 852 P.2d at 

564. 

This Court stated:

 [W]e are urged to assert state court jurisdiction over Indian trust land by

 figuratively bringing it into state court for valuation prior to an ordered sale

 and division of proceeds or a monetary award equal to Robert's equitable

 share of the value of the land. Based on our discussion of 28 U.S.C. 

 1360(b) . . . we conclude that any of these actions would result in a

 prohibited adjudication of interests in Indian trust land.

Marriage of Wellman, 852 P.2d at 564.

 Similarly, here, the Krauses assert in their brief to this Court that "the 

express

terms of the amended complaint, which controls this matter, seek compensatory and

punitive damages, as well as attorney fees but do not seek an interest in Indian 

trust

land." Regardless of whether the Krauses pray for specific performance of the 

contract

or for money damages for its breach, the District Court must decide the issues of 

liability

which, as stated above, it cannot do without impermissibly asserting jurisdiction 

over

Indian trust land.

 The Neumans also ask this Court to sanction the Krauses for filing a frivolous

appeal and to award the Neumans attorneys' fees, costs, and other appropriate 

damages. 

This Court, when satisfied that an appeal "was taken without substantial or 

reasonable

grounds," may assess such damages as we deem proper. Rule 32, M.R.App.P.; CNA

Ins. Co. v. Dunn (1995), 273 Mont. 295, 902 P.2d 1014. We find that the Krauses had

reasonable grounds for filing this appeal; thus, we decline to impose sanctions 

under Rule

32.

 For the foregoing reasons, we affirm the decision of the District Court. 

 /S/ W. WILLIAM LEAPHART

We concur:

/S/ J. A. TURNAGE

/S/ JAMES C. NELSON

/S/ KARLA M. GRAY

/S/ JIM REGNIER 

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