Opinion ID: 4526620
Heading Depth: 2
Heading Rank: 3

Heading: Collier’s Performance and Default

Text: In December 1997, Collier began making its required Trust Fund Payments—95 percent of which the Government “deposited . . . into the AITF”—as well as payments toward the Annuity. J.A. 70. 8 In 1998, and again in 2007, “Collier requested releases of [the] liens” on Collier’s 7 The Deed of Trust defined the “Release Level Amount” as (i) the unpaid principal plus accrued interest on the Promissory Note, less (ii) the value of [U.S.] Government-backed Securities and Deposited Monies held in the Trust Estate, and further less, after the expiration of two years from the [c]losing [d]ate . . . (iii) the fair value, at the time of the calculation, of the Annuity. J.A. 560. 8 Collier’s Trust Fund Payments and annuity pay- ments were due December 18 of each year, beginning in 1997 and continuing through 2026. J.A. 508; see J.A. 175, 496, 507–08, 510. Case: 19-1758 Document: 29 Page: 10 Filed: 04/17/2020 10 INTER-TRIBAL COUNCIL OF AZ v. UNITED STATES Downtown Development Interests, “both of which the [Government] granted.” J.A. 71. After the lien release in 2007, “only the [fifteen]-acre Phoenix Indian School [P]roperty remained in the Trust Estate to secure [Collier’s] . . . obligations.” J.A. 72. Although the Government “received appraisals submitted by Collier” “[i]n connection with the two lien releases,” the Government “did not perform or cause to be performed its own appraisals of the security in the Trust Estate either before or after releasing the liens.” J.A. 71. At that time, the Government also “did not provide notice to ITCA of its decisions to release the liens” on Collier’s Downtown Development Interests, and “did not provide information to ITCA from which ITCA could independently calculate the value of the existing or remaining security that the [Government] held in the Trust Estate[.]” J.A. 72. In December 2012, after making fifteen Trust Fund Payments of $2,966,500, “for a total of $44,497,500[,]” and fifteen annual payments into the Annuity for a total of $9,662,000, J.A. 665; see J.A. 70, Collier met with the DOI to discuss Collier’s remaining payment obligations and “to see if [they] c[ould] find an alternative that would be beneficial for all parties involved[,]” J.A. 665. Later that month, Collier failed to make its required Trust Fund Payment to the Government and also failed to make its annual annuity payment. J.A. 74; see J.A. 175. In January 2013, Collier informed the Government of its intent to “no longer make payments,” J.A. 74; see J.A. 665 (Collier explaining that it was “simply not in a position to continue to make payments of such a significant magnitude”), explaining that the value of the fifteen-acre Phoenix Indian School Property had decreased to a point “far below [Collier’s] remaining obligation[,]” “mak[ing] the economics of the deal untenable for [Collier],” J.A. 665. Specifically, as of January 2013, “the only offer [Collier] ha[d] received” for the property was for $6 million, J.A. 665; see J.A. 74–75, whereas, Collier’s “remaining obligation consist[ed] of another $44,497,500 in interest payments, and the remaining princip[al] [of] Case: 19-1758 Document: 29 Page: 11 Filed: 04/17/2020 INTER-TRIBAL COUNCIL OF AZ v. UNITED STATES 11 approximately $22 million, for a total of approximately $66.5 million,” J.A. 665; see J.A. 76. Later that month, the DOI sent a letter to Collier, in which the DOI “noted that the value of the [remaining security] appeared to be less than 130 percent of the Release Level Amount,” J.A. 74 (internal quotation marks omitted), and demanded that Collier “add to the [T]rust [E]state” additional security, J.A. 731; see J.A. 75. By March 2013, the DOI shared these letters with ITCA, informing ITCA that Collier was in default and that Collier’s obligations were under collateralized. J.A. 75. In April 2013, the DOI sent another letter to Collier, in which the DOI “repeated its demand” that Collier “supplement the value of the Trust Estate with [U.S.] [G]overnment-backed securities.” J.A. 75. D. The Government Sought to Require Collier to Provide Additional Security In January 2014, the Government filed suit against Collier in the Arizona District Court, “s[eeking] to require Collier to provide additional security to fulfill its contractual promises to the [Government].” J.A. 76 (internal quotation marks omitted). 9 The Government alleged that “[s]ince 2007, the value of the [fifteen]-acre [Phoenix] Indian School [P]roperty ha[d] dropped significantly, and that reduction in value ha[d] left the debt owed by Collier grossly under-collateralized.” J.A. 606; see J.A. 75. Specifically, the Government alleged that “Collier [wa]s currently below its required level for collateral by an amount equal to $18,499,556,” and thus “Collier [wa]s required to make additional pledges of collateral in the form of [U.S.] 9 The Government “sought to recover only four $2.9 million [Trust Fund] [P]ayments, reflecting payments missed for the years 2012, 2013, 2014[,] and 2015,” J.A. 76 (emphasis omitted), but “did not take into account the $2.9 million annual [Trust Fund] [P]ayments due . . . each year after 2015 and until 2026,” J.A. 77. Case: 19-1758 Document: 29 Page: 12 Filed: 04/17/2020 12 INTER-TRIBAL COUNCIL OF AZ v. UNITED STATES Government-backed securities in th[at] amount . . . to achieve the minimum level of 130[ percent] of the Release Level Amount anticipated as of December 31, 2015.” J.A. 78. The Government and Collier “stipulated that the value of the [fifteen-acre] Phoenix Indian School [P]roperty (based on appraisals as of September 15, 2015) was $25 million,” and that “[a]ccording to the [Government], the value of the Annuity as of November 30, 2015[,] was approximately $13.3 million.” J.A. 76. In August 2016, the Arizona District Court “ordered [Collier] to render specific performance . . . by providing to the [Government] . . . [U.S.] [G]overnment-backed securities as added Trust Estate collateral[,]” and further ordered that “[t]he fair market value of the securities upon performance shall be the sum of (a) $20,452,281.00 and (b) $10,565.00 multiplied by the number of calendar days between July 22, 2016[,] and the date of performance.” J.A. 784; see J.A. 79–80. In September 2016, the Arizona District Court stayed execution of its judgment, pending resolution of post-trial motions, J.A. 973; and, in October 2016, the Arizona District Court stayed litigation, “except as to settlement related purposes[,]” based upon a “tentative” settlement agreement between the parties, J.A. 974. In July 2017, the Government and Collier “reached and executed” a settlement agreement, J.A. 80, after which the Arizona District Court “terminated [the case] in its entirety with prejudice[,]” J.A. 81. The Government “reported . . . that the . . . settlement ha[d] a projected gross recovery of $54.5 million, consisting of $16 million cash, $13.5 million in [the] [A]nnuity, and [the fifteen-acre] Phoenix [Indian School Property] with a 2015 appraised value of $25 million.” J.A. 81. Pursuant to the settlement agreement, in July 2017, Collier paid “$16 million in cash” to the Government. J.A. 81. In 2018, the General Services Administration sold the fifteen-acre Phoenix Indian School Property for $18.5 million. J.A. 85. Case: 19-1758 Document: 29 Page: 13 Filed: 04/17/2020 INTER-TRIBAL COUNCIL OF AZ v. UNITED STATES 13