Opinion ID: 777979
Heading Depth: 2
Heading Rank: 2

Heading: The Construction and Term Loan Agreement and the Participation Agreement

Text: 12 On June 7, 1996, BNC and the Tribe entered into a Construction and Term Loan Agreement. Under the terms of the agreement, BNC agreed to make advances to the Tribe in the aggregate amount of $17.5 million, conditioned upon Casino Magic's commitment to contribute to the loan up to $5 million, or 28.6 percent of the loan. Article V, Section 5.1(p) of the Agreement obliged the Tribe to accept and comply with all of the recommendations made by the Consultant under the Consulting Agreement, except to the extent that any such recommendations are not consistent with current Indian Gaming Practices or industry standards. ( Id. at 209). Casino Magic was not a party to the Construction and Term Loan Agreement. The district court determined that Casino Magic's status as consultant continued after the Construction and Term Loan Agreement became effective. 13 On June 28, 1996, BNC and Casino Magic entered into a Participation Agreement to formalize Casino Magic's consent to contribute a percentage of the Tribe's financing for the casino. The Participation Agreement stated in relevant part: this loan participation [agreement] constitutes a sale of a percentage ownership interest in the referenced indebtedness, and, collateral security and in the `loan documents'... and shall not be construed as an extension of credit by [Casino Magic] to [BNC]. (Appellant's Separate App. at 233). 14 The parties submitted the Construction and Term Loan Agreement to the BIA for § 81 approval, but it was not submitted to the NIGC. On July 10, 1996, the BIA issued a Section 81 Accommodation Approval and Disclaimer letter stating, The Department has reviewed the documents, determined that they do not constitute an agreement relative to the Tribe's trust land or other trust assets and, therefore, the Documents are not subject to the provisions of 25 U.S.C. § 81. (Appellee's App. at 753). 15 The Tribe received its first advance from the approved loan after receipt of this letter. As part of this first disbursement, Casino Magic received a cashier's check from BNC in the amount of $4,102,718.45 to satisfy the Tribe's pre-existing loan obligation under the 1994 Secured Loan Agreement. 16 On January 15, 1998, Casino Magic requested a consulting fee payment from the Tribe under the terms of the Consulting Agreement. On January 28, 1998, before paying the consulting fee, the Tribe terminated the Consulting Agreement. Following termination, the Tribe submitted the Consulting Agreement and the Construction and Term Loan Agreement to the NIGC for joint review. After inspecting both documents, the NIGC stated in relevant part: 17 Certain provisions of the submitted documents are of particular concern to the construction of the management contract. More specifically, Section 5.1(p) of the Construction and Term Loan Agreement requires that the Tribe accept and comply with all of the recommendations made by the Consultant under the Consulting Agreement ... pg. 17. The Agreement further provides that ... [T]he Tribe will maintain the Consulting Agreement ... in full force and effect ..., and limits the Tribe's ability to terminate the Agreement while there is any outstanding balance due to the BNC National Bank. Section 5.1(g) pgs. 17-18. As mentioned in your request letter dated February 12, 1998, these provisions call into question the actual relationship between the Sisseton-Wahpeton Sioux Tribe and CMA. 18 After careful review, we have determined that the Consulting Agreement and related documents, when considered as a whole, are management contracts. As such, the submitted documents require the approval of the Chairman of the NIGC. 19 (Appellant's Separate App. at 188). 20 The Tribe replaced Casino Magic with another consulting company, and on October 9, 1997, Bernard filed a qui tam action on behalf of the United States government claiming that 25 U.S.C. § 81, 18 U.S.C. § 438, and 25 U.S.C. § 2711 had been violated. He alleged that the Consulting Agreement and the Construction and Term Loan Agreement, when considered together, comprised a management contract that required NIGC approval. He argued that the parties' failure to seek such approval voided the contracts under § 81, requiring Casino's Magic's return of an amount in excess of $7 million dollars extracted from the Tribe under the unapproved agreement. 21 Casino Magic sought summary judgment as a matter of law, contending that there was no § 81 violation because the Consulting Agreement was approved by the BIA on behalf of the Secretary of the Interior and the Commissioner of Indian Affairs, and was reviewed by the NIGC, which concluded it did not have to approve the contract because it was not a management agreement. Casino Magic also asserted that it had not been paid any fees by the Tribe; it had only been reimbursed the $4,102,718.45 that it had advanced to the Tribe for construction, plus an additional $350,000 it had advanced to the Tribe for other expenses. 3 The district court granted Casino Magic's motion, holding that, contrary to Bernard's contention, the Construction and Term Loan Agreement between the Tribe and BNC did not convert the Consulting Agreement into a management contract requiring the approval of the NIGC. It stated: 22 [t]he record is clear that Casino Magic performed its consulting duties in a manner that resulted in the development of a well planned and maintained casino. When the casino became profitable and Casino Magic demanded payment pursuant to the Consulting Agreement, the tribe terminated their relationship and later submitted the Consulting Agreement and the Construction Loan Agreement [sic] to the NIGC with the suggestion that, when read jointly, they comprised a management contract requiring approval under 25 U.S.C. § 81 and § 2711. Because Congress never intended the qui tam provision of § 81 to be used in the manner proposed by plaintiff, and based upon the reasons stated above, it is hereby ordered that Casino Magic's motion for [summary judgment] is granted. 23 United States Ex. Rel. Maynard Bernard v. Casino Magic Corp., Civ. 98-1033, slip op. at 14-15 (D. S.D. April 23, 2001) (order granting motion for summary judgment) (footnote omitted). 24 On appeal, Bernard asks us to consider whether the district court: erred in granting summary judgment in favor of Casino Magic; abused its discretion in denying plaintiff's motion to amend its complaint to add BNC as an additional party; and abused its discretion in refusing to extend the deadline for discovery. We reverse the grant of summary judgment, hold that the agreements, when considered together, constituted a management agreement, and remand for action consistent with this opinion.