Opinion ID: 525654
Heading Depth: 2
Heading Rank: 3

Heading: Sidney and Lena Bedoni's Claim to Increased Benefits:

Text: 38 The Bedonis argue that if Darrell is not entitled to benefits in his own right because his claim to benefits properly derives from that of his parents, then they were shorted in the amount of benefits they received. They contend that they are entitled to the benefits that a family of four or more would have received. The Bedonis, however, signed a relocation application and contract seeking benefits given to families of three or less. The granting of benefits sought is hardly arbitrary, capricious, or an abuse of discretion. 39 The Bedonis nonetheless urge that the NHIRC should be estopped from denying them additional benefits because they justifiably relied on the encouragement and representations of NHIRC employees that their children should apply independently and that the children were entitled to benefits in their own right. 40 We need not and therefore decline to address the estoppel cause of action championed by the Bedonis. For a more fundamental reason we think it clear that the Bedonis should receive an opportunity to show that, had Darrell and Norma been included on the application, they would have been entitled to the benefits of a family of four or more persons. For the reasons set forth below, we hold that the NHIRC breached the fiduciary obligation it owed to the Bedonis as Native Americans entitled to benefits under the Settlement Act. 41 It cannot be gainsaid that the NHIRC owed a fiduciary obligation to all members of the Hopi and Navajo Tribes who were obligated to relocate from lands allocated to the other Tribe pursuant to the court-ordered partition. To begin with, it is hardly a novel proposition that the Secretary of the Interior and the NHIRC, as entities and representatives of the executive branch of the federal government, have a general trust relationship with Native American Tribes. The United States Supreme Court has repeatedly recognized the distinctive obligation of trust incumbent upon the Government in its dealings with [Native Americans]. Seminole Nation v. United States, 316 U.S. 286, 296, 62 S.Ct. 1049, 1054, 86 L.Ed. 1480 (1942). See, e.g., United States v. Mason, 412 U.S. 391, 398, 93 S.Ct. 2202, 2207, 37 L.Ed.2d 22 (1973); United States v. Candelaria, 271 U.S. 432, 442, 46 S.Ct. 561, 563, 70 L.Ed. 1023 (1926); Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17, 8 L.Ed. 25 (1831). As a consequence of this general trust relationship, the Government is held to a high standard of conduct, one in keeping with its moral obligations of the highest responsibility and trust. Seminole Nation v. United States, 316 U.S. at 297, 62 S.Ct. at 1054. 42 In addition to the longstanding general trust obligation that has dominated Government interaction with Native Americans, the language of the Settlement Act itself directly supports the existence of a fiduciary relationship. 1 For example, Sec. 640d-9 declares that the lands allocated to the respective Tribes shall be held in trust by the United States exclusively for [the respective Tribes]. 25 U.S.C. Secs. 640d-9(a), 640d-9(b). 43 Similarly, Sec. 640d-10, which provides for the acquisition of lands in close proximity to the reservation in order to compensate the Navajo Tribe for land lost pursuant to the relocation states that title [to the acquired lands] shall be taken by the United States in trust for the benefit of the Navajo Tribe as a part of the Navajo Reservation[.] 25 U.S.C. Sec. 640d-10(a). 44 Section 640d-30 establishes the Navajo Rehabilitation Trust Fund to be composed of all of the net income derived by the Navajo Tribe from the surface and mineral estates of the lands acquired under Sec. 640d-10. These funds, of which the Secretary of the Interior is the named trustee, are to be used solely for purposes which will contribute to the continuing rehabilitation and improvement of the economic, educational, and social condition of [Navajos displaced by the partition and relocation]. 25 U.S.C. Sec. 640d-30(b). 45 The undisputed general trust obligation, buttressed by the many grants of express trustee authority in the Settlement Act, justify the imposition on the NHIRC of an affirmative duty to manage and distribute the funds appropriated pursuant to the Settlement Act such that the displaced families received the full benefits authorized for them. See United States v. Mitchell, 463 U.S. 206, 224-26, 103 S.Ct. 2961, 2971-72, 77 L.Ed.2d 580 (1982) (since Government owes Native Americans fiduciary duty with respect to management of reservation lands, Native Americans may sue for damages for mismanagement of timberlands on reservation); McGinn v. Merrill Lynch, 736 F.2d 1254, 1258 (8th Cir.1984) (at common law, fiduciary's failure to provide reasonably thoughtful or careful advice actionable, even though non-fiduciary's failure to do so not actionable). 46 On these facts we find that the NHIRC breached the affirmative duty--arising from its fiduciary obligation--to assist the Bedonis to receive the maximum benefits allowed them under the Settlement Act. The Bedonis originally listed all three of their children when they applied for relocation benefits. Sometime prior to signing the contract, they removed them. Ms. Yazzie, a relocation counselor, submitted her affidavit indicating that at the time that the Bedonis applied, it was NHIRC policy to encourage relocating families to have any children nearing the age of 18 and working or going to school apply for benefits on their own rather than as dependent children of their parents because it would be in their best interests to do so. 47 The NHIRC insists that it is a simple case of the Bedonis accepting the risk of having their children apply independently. We cannot accept this contention where a fiduciary, pursuant to agency policy, apprised them of the possibility of taking that risk, advised them how, and encouraged them to do it, and where the net outcome was that the Bedonis received nearly $20,000 less than they were entitled to had they retained their children on their application. 48 In holding that the NHIRC breached its fiduciary obligation, we are mindful that the NHIRC and the entire relocation program have been wracked with problems since their inception. A 1978 Senate Report, issued pursuant to a Bill to amend the Settlement Act states: 49 Extensive evidence was presented to the committee during 2 days of hearings to the effect that since the establishment of the [NHIRC] there has been a critical lack of effective cooperation, coordination, comprehensive planning and resource allocation.... This situation has resulted in social, economic, physical, and emotional hardship on the members of both the Navajo and Hopi tribes who are subject to relocation.... 50 The hearing record and field investigation indicate that the Commission has been plagued with conflicts between the Commissioners and their past Executive Directors resulting in a high turnover of Executive Directors.... [This situation has] resulted in unnecessary confusion and delay in the daily administration of the Commission. 51 S.Rep. No. 1158, 95th Cong., 2d Sess. 4 (1978). 52 The problems continued after 1978. A 1980 House Report declares that [i]n the opinion of the managers [of the Committee of Conference] there has been a failure on the part of the executive branch to effectively carry out the terms of the Settlement Act. H.R.Rep. No. 1094, 96th Cong., 2d Sess. 11 (1980). In 1983, some six years after the Bedonis first applied for benefits pursuant to the Settlement Act, the regulations promulgated under the Settlement Act remained in a state of flux. The published notice proposing amendment of the regulations states: 53 As a result of administrative review and court action, it has become apparent to the Commission that the present rules are confusing, ill-defined and provide no certainty to applicants as to what constitutes eligibility. The proposed revision is necessary to clarify the current rules and to bring the rules more closely in line with the language of the Act and intent of Congress. 54 48 Fed.Reg. 33,005 (1983) (to be codified at 25 C.F.R. pt. 700) (proposed July 20, 1983) (emphasis added). 55 In one of the earliest reported decisions concerning Native Americans' status vis a vis the federal government, Justice Marshall wrote: Their relation to the United States resembles that of a ward to his guardian. Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17, 8 L.Ed. 25 (1831). This principle continues to instruct courts today when confronted with cases involving the federal-Native American relation. 56 In this context, we cannot say that the Bedonis, as wards of the Government--and, by extension, the NHIRC--were obligated to bear the risk of confusing, ill-defined regulations when they applied for relocation-housing benefits. Indeed, it was incumbent upon the NHIRC to manage and distribute the funds appropriated pursuant to the Settlement Act in such a manner that the Bedonis received the maximum amount of benefits available to them. This the NHIRC plainly failed to do when, pursuant to agency policy at the time, it encouraged the Bedonis to remove their children from their application and have them apply on their own. 57 Based on our review of the legislative history of the Settlement Act, we think it highly probable that, when the Bedonis applied in 1977, no one knew with any precision what constituted eligibility under the Settlement Act. The Bedonis should not and will not have to shoulder the burden of the NHIRC's failure in this regard. 58 It cannot be claimed that the Bedonis took a chance and gambled that they would receive more benefits if their children applied independently, for nowhere in the statute or in the regulations have we found a provision characterizing the application for replacement-housing benefits as a game of chance. The Bedonis were entitled to thoughtful, accurate advice on how to receive the benefits to which they were entitled, and the NHIRC, as a fiduciary, was required to and failed to provide it. 59 We, therefore, reverse the district court's judgment granting the NHIRC's motion for summary judgment on the Bedonis' alternative claim to increased housing benefits. We remand to the district court for further proceedings in conformity with this opinion. On remand, the district court should consider whether the Bedonis would have been eligible as a family of four or more persons had Darrell and Norma been included on the application. If so, the district court should direct the NHIRC to award the additional benefits. 60 JUDGMENT AFFIRMED IN PART, REVERSED IN PART AND REMANDED. COSTS TO BE AWARDED TO PLAINTIFFS-APPELLANTS.