Opinion ID: 1226463
Heading Depth: 3
Heading Rank: 3

Heading: Management and Collateral Agreements

Text: Having rejected the Catskill Group's threshold Indian land and precursory obligation arguments, we now turn to the question of whether the contracts at issue were management contracts void under 25 C.F.R. § 533.7, or otherwise unenforceable. See Scutti Enters., LLC v. Park Place Entm't Corp., 322 F.3d 211, 215 (2d Cir.2003) ([I]n the absence of an enforceable contract, it was appropriate to dismiss Scutti's cause of action for tortious interference with contractual relations.). As noted above, § 533.7 provides that:  Management contracts . . . that have not been approved by the Secretary of the Interior or the Chairman in accordance with the requirements of this part, are void. 25 C.F.R. § 533.7 (emphasis added). In turn, the regulations define a management contract as any contract, subcontract, or collateral agreement between an Indian tribe and a contractor . . . if such contract or agreement provides for the management of all or part of a gaming operation.  Id. § 502.15 (emphasis added). A collateral agreement includes any contract . . . that is related, either directly or indirectly, to a management contract. Id. § 502.5. As an initial matter, the MA (Management Agreement) entered into between Mohawk and the Tribe, which provided for the management of the putative casino, is clearly subject to section 533.7's voiding provision. The more difficult question is whether the remaining two contracts at issuethe LPA (Land Purchase Agreement) entered into between Catskill and the Tribe, and the DCA (Development and Construction Agreement), entered into between Monticello and the Tribeare also subject to the voiding provision or are otherwise unenforceable. It is undisputed that both the DCA and LPA are collateral agreements to the MA insofar as they are related to that contract. See id. § 502.5. But a collateral agreement is subject to agency approval under Id. § 533.7 only if it provides for the management of all or part of a gaming operation. Id. § 502.15; see also Machal, Inc. v. Jena Band of Choctaw Indians, 387 F.Supp.2d 659, 665-67 (W.D.La.2005). [20] Whether an agreement meets this requirement depends on the circumstances and is not always self-evident. See First Am. Kickapoo Operations L.L.C. v. Multimedia Games, Inc., 412 F.3d 1166, 1172-75 (10th Cir.2005) (holding that operating lease constituted a management agreement); Machal, 387 F.Supp.2d at 667 (holding that a settlement agreement, which expressly purported not to be a gaming agreement, was in fact a management contract insofar as it allocated management authority in regards to a casino); see also 57 Fed.Reg. 12,382-01, 12,388 (April 9, 1992) (NIGC will review for approval any agreement, however labeled, the subject matter of which is the management of a gaming operation). In this case, Park Place argues that the DCA and LPA were management contracts insofar as they contained hidden management fees. In particular, Park Place claims that the DCA's 5% development fee and the LPA's $10 million purchase price were intended as back-door management compensation. Further, with respect to the DCA only, Park Place points out that Monticello was to be repaid for the construction of the proposed casino from the proceeds derived from the operation of the casino. See Machal, 387 F.Supp.2d at 667-68 (holding that one of the agreements at issue was a management contract, in part, because it required the tribe to repay from gaming revenues the loans it received from plaintiff for construction of the casino and other costs); see also In re SRC Holding Corp., 352 B.R. 103, 174-78 (Bankr.D.Minn.2006) (pledge agreement that purported to assign to lender the manager's rights to management fees constituted a management contract subject to NIGC approval), rev'd in part on other grounds, 364 B.R. 1 (D.Minn.2007). We need not independently determine whether the DCA or LPA are collateral agreements subject to agency approval because: (1) the agency appears already to have made that determination, see United States ex. rel . Bernard v. Casino Magic Corp., 293 F.3d 419, 425 (8th Cir.2002) (deferring to NIGC's determination that agreement was a management contract subject to approval); (2) at all relevant times the contracting parties treated these agreements as being subject to agency approval; (3) and the terms of the contracts themselves contemplated agency approval, see Scutti, 322 F.3d at 215 (agreeing with district court finding that under its unambiguous terms, Scutti's proposed contract with the Mohawks was not effective or bindingand therefore not enforceableuntil approved by the NIGC). Specifically, both the DCA and the LPA were submitted to the NIGC for review. With respect to the DCA, the NIGC's Director of Contracts stated in an April 19, 2000 letter denying agency approval that it had determined that the [MA] and DCA together are management contracts and are subject to NIGC approval. Moreover, with respect to the LPA, the NIGC Director of Contracts by letter twice requested an explanation for the Tribe's proposed purchase price for the land, and expressed the concern that the purchase price was a hidden management compensation. Although the Catskill Group responded that the purchase price was a fair one, at no time did it challenge, at the agency level, the NIGC's determination that the LPA was subject to its approval. The same is true with respect to the terms of the DCA. Indeed, in Master Agreements entered into between the Tribe and the Catskill Group in 2000, the parties expressly recited that the agreements for the purchase of the property, [i.e., the LPA] and the development, [and] construction. . . of the gaming facility [i.e., the DCA] had been submitted to the NIGC and the BIA for review and approval. (emphasis added). Moreover, by their terms both the LPA and DCA contemplated prior agency approval by the BIA. In particular, the DCA's effective date was contingent upon receipt of BIA approval, while the LPA's land deal was contingent upon the BIA's approval of the transfer of land into trust for the Tribe. Under these circumstances, we conclude that all of the contracts at issue were void under § 533.7 absent the requisite agency approval(s). Accordingly, we affirm the district court's dismissal of the Catskill Group's interference with contract claim.