Opinion ID: 185354
Heading Depth: 2
Heading Rank: 3

Heading: Duty to Account

Text: 91 Holding that appellants' fiduciary duties predate the 1994 Act does not dispose of all their claims. Having determined the source of appellants' obligations, we must now consider what those duties entail, at least with respect to the claims at hand. Specifically, we must consider the nature and extent of the fiduciary duty to account appellants owe to IIM trust beneficiaries. 92 Appellants' challenge focuses on the district court's conclusion that the IIM trust beneficiaries are entitled to a complete historical accounting of their trust accounts. The government maintains that no such right is conferred by the 1994 Act. Rather, the Act delegates responsibility for determining the nature and scope of an accounting to the Interior Department. The accounting required by Section 102 of the Act is merely a prospective right and, according to appellants, does not speak to the extent to which the Secretary must inquire into the correctness of past transactions. Reply Brief for Appellants at 17. While appellants concede that some type of review of past transactions may indeed be necessary to accurately state opening balances, this does not mean that the plaintiffs have a judicially enforceable right to a complete historical accounting. Id. Even were the plaintiffs entitled to such an accounting, appellants contend that the Interior Department, and not the court, would have the authority to determine the nature and scope of the accounting. 93 Contrary to appellants' claims, Section 102 of the 1994 Act makes clear that the Interior Secretary owes IIM trust beneficiaries an accounting for all funds held in trust by the United States for the benefit of an Indian tribe or an individual Indian which are deposited or invested pursuant to the Act of June 24, 1938. 25 U.S.C. § 4011(a) (emphasis added). All funds means all funds, irrespective of when they were deposited (or at least so long as they were deposited after the Act of June 24, 1938). Therefore, the 1994 Act reaffirms the government's preexisting fiduciary duty to perform a complete historical accounting of trust fund assets. 94 Appellants place substantial weight on the fact that Title III of the 1994 Act instructs the ST to oversee any accounting or account reconciliation conducted by Interior. Under Section 303(b)(2)(A) the ST shall monitor the reconciliation of trust accounts and ensure that there is a fair and accurate accounting of all trust accounts. Id. § 4043(b)(2)(A). Further, Section 304 of the Act requires the Interior Secretary to report on any account reconciliation that takes place and what steps will be taken to resolve disputes over account balances. Id. § 4044. Section 101 of the Act, on the other hand, specifies numerous actions that must be taken by the government, but does not dictate the nature or scope of any accounting. See id. § 162a(d). 95 Yet Title III of the 1994 Act does not vindicate the government's position as these provisions merely detail the oversight functions of the ST, not the fiduciary responsibilities of the federal government. The language in Title III, if anything, supports plaintiffs' claims, as it requires the ST to ensure that BIA provides the account holders, with a fair and accurate accounting of all trust accounts. Id. § 4043(b)(2)(A) (emphasis added). Appellants never explain how one can give a fair and accurate accounting of all accounts without first reconciling the accounts, taking into account past deposits, withdrawals, and accruals. Indeed, the government's own expert acknowledged that one could not determine an accurate account balance without confirming historical account balances. 96 Even were the language of the 1994 Act ambiguous, this would not redeem appellants' position, as we follow the same rules of construction with regard to Indian trust expectations discussed above. Courts must be guided by that 'eminently sound and vital canon' that 'statutes passed for the benefit of Indian tribes ... are to be liberally construed, doubtful expressions being resolved in favor of the Indians.'  Bryan v. Itasca County, 426 U.S. 373, 392 (1976) (citations omitted); see also Alaska Pacific Fisheries v. United States, 248 U.S. 78, 89 (1918) ([s]tatutes passed for the benefit of dependent Indian tribes ... are to be liberally construed, doubtful expressions being resolved in favor of the Indians.); Muscogee (Creek) Nation, 851 F.3d at 1445 n.8 (courts should consider, but not defer, to agency interpretations of statutes concerning the federal government's obligations to Indians); Jicarilla, 728 F.2d at 1563 ([W]henever doubt or ambiguity exists in federal statutes or regulations, such doubt is resolved in favor of the tribes.). Again, as we noted above, the canon of liberality of construction in favor of the Indians acts with its special strength even where a federal agency would in other cases enjoy the implied authority to implement ambiguous statutory language supporting a competing interpretation. Albuquerque Indian Rights, 930 F.2d at 59; see also Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766 (1985) (noting that the standard principles of statutory construction do not have their usual force in cases involving Indian law). 97 Not only does the 1994 Act plainly reaffirm the government's preexisting duty to provide an accounting to IIM trust beneficiaries, but it is plain that such an obligation inheres in the trust relationship itself. The obligation of a trustee to provide an accounting is a fundamental principle governing the subject of trust administration. White Mountain Apache Tribe of Arizona v. United States, 26 Cl. Ct. 446, 448 (1992) (citing G.T. Bogert, Trusts § 141, at 494 (6th ed. 1987)). 98 The 1994 Act requires that the Interior Department perform an adequate accounting. This indicates that the accounting must be sufficient to serve the purposes for which a trust accounting is typically conducted. By this standard, the district court's conclusion that the management of a trust and rendering of an adequate accounting requires the locating and retention of records, operational computer systems, and adequate staffing was, in plaintiffs' words, self-evident. Anything less would produce an inadequate accounting. 99 This conclusion is reinforced by basic common law trust principles. It is black-letter trust law that [a]n accounting necessarily requires a full disclosure and description of each item of property constituting the corpus of the trust at its inception. Engelsmann v. Holekamp, 402 S.W.2d 382, 391 (Mo. 1966); see also Black's Law Dictionary (7th ed. 1999) (defining accounting as the report of all items of property, income, and expenses prepared by the trustee for the beneficiary). Under traditional equitable trust principles, [t]he trustee's report must contain sufficient information for the beneficiary readily to ascertain whether the trust has been faithfully carried out. White Mountain Apache Tribe, 26 Cl. Ct. at 449. 100 Appellants maintain that even if an accounting is required, the district court overstepped its bounds by defining the nature of the accounting required. This argument both misrepresents the district court's opinion and misconstrues the relevant trust law principles. The district court made clear that it was not ruling upon what specific form of accounting, if any, is required by the 1994 Act or the government's preexisting fiduciary obligation. Cobell V, 91 F. Supp. 2d at 40, n.32. Rather, it noted that an accounting is, in fact, required, and that such an accounting must be of all money in the IIM trust held in trust for the benefit of plaintiffs, without regard to when the funds were deposited. Id. at 58. The district court explicitly left open the choice of how the accounting would be conducted, and whether certain accounting methods, such as statistical sampling or something else, would be appropriate. Such decisions are properly left in the hands of administrative agencies. 101 Claiming the role of administrator, however, does not absolve the government of its enforceable obligations to the IIM trust beneficiaries. As noted above, appellants may not escape from their fiduciary obligations by appealing to their roles as administrators of a federal program. In those capacities, they are trustee delegates of the federal government who owe substantial fiduciary duties to IIM trust beneficiaries. If the Secretary is obligated to act as a fiduciary ... then his actions must not merely meet the minimal requirements of administrative law, but must also pass scrutiny under the more stringent standards demanded of a fiduciary. Jicarilla, 728 F.2d at 1563. 102 Appellants also argue that whatever right to an accounting plaintiffs may have, the district court erred insofar as it determined that such a right was judicially enforceable. The only action for an accounting that could be judicially compelled, according to the government, would be an accounting accompanying an action for money damages in the court of claims under the Tucker Act. According to appellants, Mitchell II provides that plaintiffs can seek monetary damages in a Tucker Act claim, but not declaratory or injunctive relief because these prospective equitable remedies are totally inadequate. 463 U.S. at 227. No common law claim for an accounting is cognizable, and even if it were, such a claim has been waived by the plaintiffs' failure to file a cross-appeal on that claim. 103 Here again, appellants misconstrue the relevant case law. We have already determined that there is federal jurisdiction to hear plaintiffs' claims insofar as the federal government has unreasonably delayed or unlawfully withheld performance of its trust duties. Federal courts have repeatedly recognized the right of Native Americans to seek relief for breaches of fiduciary obligations, including suits for monetary damages under the Tucker Act where prospective remedies would be inadequate. Indeed, this is the clear import of Mitchell II. See 463 U.S. at 226 n.31, 227. It is fundamental that an action for accounting is an equitable claim and that courts of equity have original jurisdiction to compel an accounting. Klamath and Modoc Tribes v. United States, 174 Ct. Cl. 483, 487 (1966). 104 This position should not come as a surprise to appellants, as it has been the official position of the federal government. In 1996 (prior to the filing of the initial complaint in this case) the Interior Department's Solicitor issued an opinion that government trustees have an affirmative duty ... to make a full and proper accounting. Nothing in the 1994 Act, nor any other federal statute, acts to limit or alter this right.