Opinion ID: 777979
Heading Depth: 2
Heading Rank: 1

Heading: Management and Consulting Agreements

Text: 2 We adopt the factual findings of the district court, which we summarize here. In 1993, the Sisseton-Wahpeton Sioux Tribe (the Tribe) became interested in building and operating a casino on Indian trust land within the Tribe's Lake Traverse Reservation in North Dakota. The Tribe entered into a management agreement with Casino Magic on July 22, 1994. The agreement, created in accordance with the Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq. (IGRA), provided that Casino Magic would become the manager of the Sisseton-Wahpeton Dakota Nation Casino Gaming Enterprise, to be known as Dakota Magic Casino. For a management agreement involving Indian land to become a binding legal document, it must be approved by the National Indian Gaming Commission (NIGC). See 25 U.S.C. §§ 2710(d)(9), 2711. 2 The Tribe and Casino Magic agreed that such approval was a condition precedent to the contract becoming a binding legal document. The agreement was submitted to the NIGC but was never approved for reasons not clarified by the record. 3 On September 15, 1994, after finalizing the terms of the management contract, and perhaps anticipating that the Management Agreement would be approved, the Tribe and Casino Magic entered into a Secured Loan Agreement. Under the terms of this agreement, Casino Magic agreed to loan up to $5 million to the Tribe so that it could begin to build the casino. It was contemplated by both parties that once the management contract was approved, the proceeds of the loan would be repaid. In September 1994, Casino Magic advanced $4,102,718.45 to the Tribe, which the Tribe later repaid once it received a $17.5 million loan from the BNC National Bank of Bismark, North Dakota, (BNC). 4 Because the Management Agreement was never approved, the parties entered into a Consulting Agreement on March 13, 1996, under which Casino Magic was to become a consultant to assist the Tribe in developing and operating the gaming enterprise. The Consulting Agreement specifically stated that Casino Magic had no management authority over the casino. It agreed to conduct market feasibility studies, develop and identify market plans, and to provide an accounting system, written system of internal controls, security plan, and a job classification system with training. United States Ex. Rel. Maynard Bernard v. Casino Magic Corp., Civ. 98-1033, slip op. at 4 n. 2 (D. S.D. April 23, 2001) (order granting motion for summary judgment). Casino Magic also agreed to develop a long-term master plan for the casino. 5 The parties submitted the Consulting Agreement to the NIGC for approval to avoid any future dispute regarding the legitimacy of the agreement. The NIGC determined that the Consulting Agreement was not a management contract and therefore did not require the approval of the NIGC. In its February 7, 1996 letter to the Tribe, the NIGC wrote: 6 While Casino Magic will be advising and consulting on many aspects of the gaming enterprise, pursuant to the Consulting Agreement, the Tribe will retain ultimate control and direction of the casino operation. Because the Consulting Agreement does not provide for the management of all or part of the Tribe's gaming operation by any person or entity other than the Tribe or its employees, it is not a management contract. Therefore this Agreement does not require the approval of the Chairman. 7 (Appellant's Separate App. at 190). 8 The BIA also approved the Consulting Agreement. It sent a Section 81 Accommodation Approval and Disclaimer to the parties in February, 1996. The disclaimer stated in part: 9 The Department has reviewed this Agreement, determined that it does not constitute an agreement relative to the Tribe's trust land or other trust assets and, therefore, this Agreement is not subject to the provisions of 25 U.S.C. § 81. As a result, this statute does not limit or impair the Tribe's capacity to make or enter into this agreement without obtaining the approval of the Secretary of the Interior and the Commissioner of Indian Affairs. 10 ( Id. at 191). 11