Court Opinion

ID: 153219
Source: CourtListenerOpinion
Date Created: 2010-08-14 03:33:43+00
Date Added: 2024-06-11T16:47:17.792704
License: Public Domain

UNITED STATES COURT OF APPEALS
                                            Tenth Circuit
                                 Byron White United States Courthouse
                                          1823 Stout Street
                                       Denver, Colorado 80294
                                           (303) 844-3157

Patrick Fisher                                                                        Elisabeth A. Shumaker
Clerk                                                                                 Chief Deputy Clerk

                                                April 23, 1996

          TO:    ALL RECIPIENTS OF THE CAPTIONED OPINION

          RE:    95-2033, Texaco, Inc. v. Hale
                 April 8, 1996 by Judge Porfilio

                 Please be advised of the fillowing correction to the captioned decision:

                Page 2, counsel for the defendants-appellees name is incorrectly listed as Lisa M.
          Enbfield and should be corrected to read Lisa M. Enfield.

                 Please make this correction to your copy.

                                                                  Very truly yours,

                                                                  Patrick Fisher,
                                                                  Clerk

                                                                  By:

                                                                  Barbara Schermerhorn
                                                                  Deputy Clerk
                                    PUBLISH

                     UNITED STATES COURT OF APPEALS
Filed 4/8/96
                                 TENTH CIRCUIT

 TEXACO, INC.; TEXAS-NEW MEXICO
 PIPELINE,

       Plaintiffs-Appellants,,
 v.

 ALBERT HALE, successor to Peterson
 Zah as President of the Navajo Nation;
 DAVID C. BRUNT, successor to
 Nelson Gorman and Stella Saunders as
 Commissioner of the Navajo Tax
 Commission; VICTOR JOE, successor to
 Nelson Gorman and Stella Saunders as
 Commissioner of Navajo Tax
 Commission; BRUCE KEIZER, successor
                                                 No. 95-2033
 to Nelson Gorman and Stella Saunders as
 Commissioner of the Navajo Tax
 Commission; JOE SHIRLEY, successor to
 Nelson Gorman and Stella Saunders as
 Commissioner of the Navajo Tax
 Commission; LEE BERGEN, successor to
 Nelson Gorman and Stella Saunders as
 Commissioner of the Navajo Tax
 Commission; DERRICK WATCHMAN,
 member, Navajo Tax Commission;
 STEVEN BEGAY, successor to Derrick
 Watchman as Executive Director of the
 Navajo Tax Commission,

       Defendants-Appellees.

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF NEW MEXICO
                                (D.C. No. CIV-87-0124 JC)

Bradford C. Berge, Campbell, Carr & Berge, P.S., Santa Fe, New Mexico, for Plaintiffs-
Appellants.

Paul E. Frye (Lisa M. Enfield; Herb Yazzie, Attorney General; Marcelino R. Gomez; and
C. Joseph Lennihan, Navajo Nation Department of Justice, with him on the
briefs), Nordhaus, Haltom, Taylor, Taradash & Frye, LLP, Albuquerque, New Mexico,
for Defendants-Appellees.

Before PORFILIO, MCWILLIAMS, and ALARCON,* Circuit Judges.

PORFILIO, Circuit Judge.

       Honorable Arthur L. Alarcon, Senior Circuit Judge for the United States Court of
       *

Appeals for the Ninth Circuit, sitting by designation.
       This case involves the application of the tribal exhaustion

doctrine to a taxation dispute involving land located outside

Navajo     Reservation      borders      but     within   Navajo     Indian      Country.

Texaco,     Inc.    and   Texas-New      Mexico     Pipeline      (Appellants)       seek

federal declaratory relief against the Navajo Tax Commission and

officials of the Navajo Tribe and the Navajo Tax Commission (the

Tribe). We considered a prior appeal by Appellants in Texaco, Inc.

v. Zah, 5 F.3d 1374 (10th Cir. 1993) (Zah I), and remanded the case

to the district court with specific instructions.                     Here, following

the district court’s reconsideration of the issues on remand,

Appellants appeal the second dismissal of their claim.                       We affirm.

       Appellants conduct business activities within Navajo Indian

Country.1       Since 1978, the Tribe has imposed an Oil and Gas

Severance Tax on Texaco and a Business Activity Tax on Texas-New

Mexico Pipeline for their activities occurring within Navajo Indian

Country     but     outside      the    formal      boundaries       of    the    Navajo

Reservation.       In 1987, Appellants filed suit in the United States

District Court for the District of New Mexico seeking a declaratory

injunction to prohibit Tribal taxation of Appellants’ business

activities occurring outside the formal boundaries of the Navajo

Reservation.        However, the district court dismissed Appellants’

complaint without prejudice after finding Appellants failed to

       Texaco possesses several mineral leases within Navajo Indian Country while Texas-New
       1

Mexico Pipeline owns and operates an interstate pipeline crossing Navajo Indian Country.

                                           -4-
exhaust tribal remedies before seeking a federal forum.

        In   Zah     I,    we    considered two issues.                    First, Appellants

contended the Tribe lacked jurisdiction to hear the dispute. We

rejected       that       argument,       holding       “whether       tribal       courts      have

jurisdiction over non-Indians in civil cases ‘should be conducted

in the first instance in the Tribal Court itself,’” Zah, 5 F.3d at

1376 (quoting National Farmers Union Ins. Cos. v. Crow Tribe of

Indians, 471 U.S. 845, 856 (1985)), unless one of the three

exceptions to the tribal exhaustion rule is applicable.2                                            We

further held those exceptions were inapplicable to Appellants’

case.

        Second, Appellants’ argued even if the Tribe had jurisdiction,

the federal court should not have been deprived of its jurisdiction

to    determine        the      propriety       of     taxing     Appellants’          activities

occurring outside the Navajo Reservation.                            In response, we noted

the importance of comity and referred to the federal concerns

behind the tribal exhaustion rule. We then stated, in reference to

activities arising on reservation lands, “we have characterized the

tribal exhaustion rule as ‘an inflexible bar to consideration of

the merits of the petition by the federal court.’” Zah, 5 F.3d at

1378 (quoting Granberry v. Greer, 481 U.S. 129, 131 (1987)).

        2
         In National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985),
the Supreme Court held tribal courts should determine whether they have jurisdiction over non-
Indians in civil cases unless the “assertion of trial jurisdiction ‘is motivated by a desire to harass
or is conducted in bad faith,’ or where the action is patently violative of express jurisdictional
prohibitions, or where exhaustion would be futile because of the lack of an adequate opportunity
to challenge the court’s jurisdiction.” Id. at 856 n.21 (citations omitted).

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However, we further noted:

     When the dispute involves non-Indian activity occurring
     outside the reservation ... the policies behind the
     tribal exhaustion rule are not so obviously served.
     Under these circumstances, we must depend upon the
     district courts to examine assiduously the National
     Farmers factors in determining whether comity requires
     the parties to exhaust their tribal remedies before
     presenting their dispute to the federal courts.

Id. Because the district court failed to examine those factors, we

were unable to determine whether the district court abused its

discretion. As a result, we vacated the district court’s order and

remanded the case “for further examination of the comity factors

articulated in National Farmers.” Id.     Those factors are: (1)

furtherance of “the congressional policy of supporting tribal self-

government;” (2) promoting the “orderly administration of justice;”

and (3) obtaining “the benefit of tribal expertise.”    Id. at 1377-

78 (citing National Farmers, 471 U.S. at 856-57).

     On remand, after making a point by point analysis of the

National Farmers factors, the district court concluded abstention

was appropriate and again dismissed Appellants’ case.    Appellants

now appeal, contending, despite the limited remand in Zah I, the

district court’s decision must be reversed for three reasons.

First, they assert the district court’s National Farmers analysis

was improper.   Second, they argue the district court erred in

assuming Appellants consented to tribal jurisdiction.   Third, they

maintain the district court, and this court in Zah I, erroneously

held Indian Country defined the boundaries of the Tribe’s civil

                                -6-
jurisdiction.

        We start from the premise that the scope of the district

court’s jurisdiction was narrow following remand.        The only matter

returned to the district court was the “assiduous examination” of

the National Farmers comity factors. Cf. Sierra Club v. Lujan, 949

F.2d 362, 365 (10th Cir. 1991)(a limited remand circumscribes the

scope of the issues for litigation to those defined in the remand

order).      Likewise, the only issue before us is whether that

examination was performed.

        Appellants argue the district court could not properly analyze

the National Farmers factors on remand without an evidentiary

hearing and further discovery because there were factual issues in

dispute.     Quoting Williamson v. Tucker, 645 F.2d 404, 414 (5th

Cir.), cert. denied, 454 U.S. 897 (1981), Appellants contend, when

faced    with   a   motion   to dismiss raising factual issues, “the

plaintiff should have an opportunity to develop and argue the facts

in a manner that is adequate in the context of the disputed issues

and evidence.” Here, Appellants assert they “vigorously contested”

the Tribe’s allegation that all of their business activities

occurred within Indian Country.           Appellants also contend they

contested the Tribe’s allegation that Appellants consented to

tribal jurisdiction by contract.          Under this court’s decision in

Pittsburgh & Midway Coal Mining Co. v. Watchman, 52 F.3d 1531 (10th

Cir. 1995), Appellants argue the district court was required to

allow further development of the facts to determine whether any of

                                    -7-
the dispute occurred in Indian Country and the extent to which the

dispute lay within an independent Indian community.

       These questions, however, were not within the scope of the

remand. The case was not postured as though the district court was

just   commencing   consideration of a motion to dismiss.           More

importantly, however, in Zah I, Appellants conceded the disputed

land fell within the definition of Navajo Indian Country as well as

Indian Country.        Zah, 5 F.3d at 1376, n.3.

       Nevertheless,    Appellants now argue     Watchman   required the

district court to make preliminary factual findings which, in turn,

required further discovery in this case.        Even though we stated in

Watchman, “the application of the [tribal abstention] doctrine may

differ outside the formal boundaries of a reservation,” Watchman,

52 F.3d at 1537, we also noted, “[t]he facts and circumstances of

each individual situation will determine whether comity requires

abstention in that particular instance.”        Id.

       Contrary to the circumstances of this case, however, in

Watchman, one of the issues contested throughout the proceedings

was whether the area subject to Indian taxation was Indian Country.

Naturally, on remand the district court was instructed to determine

the appropriate community of reference and to make detailed factual

findings to determine whether the area was in fact a dependent

Indian community.      Id. at 1546.    Thus, under the circumstances, it

was appropriate in Watchman for the district court to further

develop the facts to reach its conclusion on remand.

                                      -8-
     In this case, however, the district court was not required to

further develop the facts because they had been conceded in Zah I.

Moreover, even in their original complaint Appellants did not seek

a declaration of what portion of the land constituted Indian

Country.      The relief they sought was a declaration that “the

imposition and enforcement of the Navajo Oil and Gas Severance Tax

and the Navajo Business Activities Tax on Plaintiffs’ activities

beyond the borders of the Navajo Reservation [is] illegal, invalid

and void.”

     We believe the circumstances of this case make Watchman

inapposite.     In short, Watchman simply does not require fact-

finding hearings when the operative fact issues have been resolved

through other means.

     Appellants make no other challenge to the district court’s

National Farmers analysis.    Our review of the district court’s

careful and detailed consideration of the circumstances leads us to

conclude its judgment is free of error on this issue.

     Appellants next argue the district court erroneously assumed

certain facts as true.     We review the district court’s factual

findings for clear error. Steiner Corp. Retirement Plan v. Johnson

& Higgins of California, 31 F.3d 935, 939 (10th Cir. 1994), cert.

denied, 115 S.Ct. 732 (1995).     “A finding of fact is ‘clearly

erroneous’ if it is without factual support in the record or if the

appellate court, after reviewing all the evidence, is left with a

definite and firm conviction that a mistake has been made.” Raydon

                                -9-
Exploration, Inc. v. Ladd, 902 F.2d 1496, 1499 (10th Cir. 1990).

     Appellants contend the district court erred in assuming all of

their activities occurred within Indian Country.       Appellants argue

they sought to show the district court, on remand, that some of

their business is conducted on land that is not part of a dependent

Indian community.    Appellants also assert Indian Country is not

synonymous with Navajo Indian Country.          However, as discussed

above, this is a latter day change of position from Appellants’

previous   concession   that   the   disputed   land   was    within    the

definition of both Navajo Indian Country and Indian Country.           Even

had the scope of the remand allowed the district court to consider

this issue, it was entitled to rely upon Appellants’ concession,

and they are now without a basis for objection.

     Appellants also assert the district court erred in assuming

Appellants entered contractual relationships with the Tribe and

“acknowledged the authority of Navajo Law and its application to

the extraction activities.”     Appellants argue the contracts were

limited to activities and facilities within the Navajo Reservation.

Nevertheless, the Tribe points to contractual language in which

Texas-New Mexico Pipeline agreed to resolve disputes by applying

“the laws of the Navajo Nation ... in the conduct of all activities

of [Texas-New Mexico] within the Navajo Nation.” Again, this issue

is beyond the scope of the remand.        Nevertheless,      the district

court did not, as suggested by Appellants, find Texaco was a party

to this agreement.      The court simply viewed the agreement as

“another consideration” for determination of the Tribe’s taxing

                                 - 10 -
power.   The district court further found, although that agreement

did not include Texaco, the business dealings of both Texaco and

Texas-New Mexico Pipeline with the Tribe, including mineral leases

with individual Navajo allotment owners, were sufficient to subject

Texaco to the jurisdiction of the Navajo Nation as well.

     After viewing the record as a whole, we conclude      there is

factual support for the trial court’s findings on both issues. The

district court did not clearly err.

     AFFIRMED.

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