2018-00238711-CU-MC

Yavapai-Apache Ntn. vs. La Posta Band of Diegueno Msn. Ind.

Nature of Proceeding: Hearing on Demurrer

Filed By: Christian, Lucas T.

Defendant La Posta Band of Diegueno Mission Indian’s (“La Posta”) demurrer to plaintiff Yavapai-Apache Nation’s (“Plaintiff” or “YAN”) complaint for declaratory relief is OVERRULED.

La Posta’s request for judicial notice is granted. Plaintiff’s request for judicial notice is granted. A court may take judicial notice of the existence of each document in a court file, but can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments.” (Bach v. McNelis (1989) 207 Cal.App.3d 852, 865.)

Factual and Procedural Background

The complaint pending before the Court contains one cause of action for declaratory relief against La Posta and the California Gambling Control Commission (“CGCC”).

This action arises from a loan agreement La Posta and YAN entered into in connection with a failed casino project and the judgments YAN obtained based thereon. Specifically, in 2009, La Posta and YAN entered into the Second Amended and Restated Loan Agreement (the “SARLA”) memorializing a loan made by YAN to La Posta to finance La Posta’s construction of a gaming facility. (Compl. ¶ 5.) La Posta defaulted on its obligations to YAN, and on November 13, 2015, YAN obtained

judgment against La Posta from the San Diego Superior Court in the amount of

$48,893,407.97 (the “San Diego Judgment”). (Compl. ¶ 6.) The San Diego Judgment states that on May 7, 2015, the jury found La Posta did not commit intentional misrepresentation with respect to YAN. (RJN, Exh. D at 1:6-7.) The judgment was affirmed by the Court of Appeal. (Compl. ¶ 6.)

In the San Diego action, La Posta cross-complained for a declaration that YAN has no

legal right to enforce any future judgment against La Posta’s quarterly payments of
$275,000 from the Indian Gaming Revenue Sharing Trust Fund (the “RSTF”). After the
jury trial in San Diego, La Posta moved for judgment on the pleadings on its cross
complaint. On October 29, 2015, the San Diego Court declined to issue a declaration,
ruling that “there is no ‘actual controversy’ at this time” and that the question of YAN’s
recourse to La Posta’s RSTF distributions “is not ripe and the Court’s determination, at

this time, would only be advisory.” (YAN RJN, Exh. C.) The Court of Appeal affirmed
the San Diego Court’s ruling that La Posta’s cross-complaint was not yet ripe. (La
Posta RNJ, Ex. A at 41, 43.) Parenthetically, the ripeness requirement, a branch of
the doctrine of justiciability, prevents courts from issuing purely advisory opinions. The
ripeness doctrine is primarily bottomed on the recognition that judicial decisionmaking

is best conducted in the context of an actual set of facts so that the issues will be
framed with sufficient definiteness to enable the court to make a decree finally
disposing of the controversy. Pacific Legal Foundation v. California Coastal Com.

(1982) 33 Cal. 3d 158, 169-170.

As stated in the SARLA, if YAN obtains a final determination from a court of competent jurisdiction that La Posta committed any act of fraud in connection with YAN or YAN’s loan to La Posta, YAN has general, unrestricted recourse to any of La Posta’s assets or revenue streams. (Compl. ¶ 7.) YAN’s Tribal Court is one of the courts of competent jurisdiction to which La Posta consented. (Comp. ¶ 7.)

On March 8, 2018, YAN obtained a judgment for an act of fraud against La Posta from the Yavapai-Apache Nation Tribal Court (the “Tribal Court Judgment”). (Compl. ¶ 8.) The Tribal Court Judgment is now a final determination because La Posta did not move for a new trial or appeal. (Compl. ¶ 9.)

The CGCC administers the RSTF from which eligible Indian tribes, including La Posta, receive quarterly payments of $275,000 each. (Compl. ¶ 10.) The RSTF is an asset to which YAN has recourse to enforce the San Diego Judgment pursuant to the terms of the SARLA and final determination in the Tribal Court Judgment that La Posta committed an act of fraud in connection with YAN or the SARLA. (Compl. ¶ 11.)

On July 27, 2018, YAN, through its counsel, sent a letter to the CGCC requesting the CGCC commence paying to YAN those quarterly RSTF distributions that the CGCC would otherwise pay to La Posta. (Compl. ¶ 12.) On August 3, 2018, the CGCC, through its counsel, wrote to YAN’s counsel to advice YAN that the CGCC would take no action on YAN’s request until the CGCC received an order from a California Court. (Compl. ¶ 13.)

“By this complaint, YAN seeks a declaration that the CGCC is obligated to pay to YAN all RSTF distributions that would otherwise be received by La Posta from and after the date of the filing of this complaint through such time as the San Diego Judgment is

satisfied, all of which payments YAN shall apply to the satisfaction of the San Diego Judgment and its accrued interest.” (Compl. ¶ 14.) YAN “desires a judicial determination of the parties’ respective rights and duties with respect to those payments La Posta is otherwise entitled to receive from the RSTF in light of the San Diego Judgment, the Tribal Court Judgment, and the terms of the SARLA.” (Compl. ¶ 22.)

La Posta now demurs to the complaint on the grounds it fails to state a cause of action because:

(1) YAN must apply for recognition of the factual findings of its tribal court in accordance with the Tribal Court Civil Money Judgment Act;

(2) Claim preclusion prohibits the complaint because it seeks to vindicate the same fundamental rights adjudicated in Yavapai-Apache Nation v. La Posta Band of Diegueno Mission Indians, No. 37-2013-0048045, filed on May 8, 2013 (the “San Diego Action”) and the subsequent appeal, Yavapai-Apache National v. La Posta Band of Diegueno Mission Indians, D069556 (Ca Ct. App. 4th Appellate District, June 28, 2017 (the “Appeal”); and/or

(3) Issue preclusion prohibits the complaint because YAN’s declaratory relief claim was previously decided in the San Diego Action and the Appeal.

Legal Standard

The purpose of a demurrer is to test the legal sufficiency of a claim. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.)

The pleading rules applicable to demurrers are now familiar and well established. Pleadings are to be liberally construed. (Code Civ. Proc. § 452) A demurrer admits the truth of all material facts properly pled and the sole issue raised by a general demurrer is whether the facts pled state a valid cause of action – not whether they are true. ( Serrano v. Priest (1971) 5 Cal. 3d 584, 591.)

A demurrer may be sustained only if the complaint lacks any sufficient allegations to entitle the plaintiff to relief. (Financial Corp. of America v. Wilburn (1987) 189 Cal. App. 3d 764, 778.) “Plaintiff need only plead facts showing that he may be entitled to some relief . . . , we are not concerned with plaintiff’s possible inability or difficulty in proving the allegations of the complaint.” (Highlanders, Inc. v. Olsan (1978) 77 Cal. App. 3d 690, 696-697.) “[Courts] are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School Dist. (1996) 50 Cal. App. 4th 726.)

Tribal Court Civil Money Judgment Act

The demurrer on this ground is OVERRULED.

La Posta contends the complaint fails to state a cause of action because YAN has not sought and obtained recognition of the Tribal Court Judgment under the Tribal Court Civil Money Judgment Act, Code of Civil Procedure sections 1730-1741 (the “TCCMJA”).

Under the TCCMJA, “[a]n applicant may apply for recognition and entry of a judgment based on a tribal court money judgment by filing an application in superior court

… .” (CCP § 1734(a) (emphasis added).) La Posta then contends “[o]nly through recognition and entry of a tribal court money judgment by the superior court does the judgment become ‘enforceable in the same manner as any civil judgment, order, or decree of a court of this state.’” (Memo at 8:15-18.)

This argument is rejected. First, by its complaint, YAN is not seeking to enforce the tribal court money judgment of $262,081 in the manner of a civil judgment. YAN only seeks a declaration of rights with respect to La Posta’s RSTF distributions based upon the Court’s analysis of three things: (1) the tribal court’s finding of fraud, (2) the San Diego Judgment, and (3) the terms of the SARLA. Indeed, it is unclear how YAN could compel La Posta to comply with the tribal court’s finding of fraud and, thereby “enforce” that finding and have judgment entered pursuant to the TCCMJA.

Second, it is clear from the statutory language “may” that applying for recognition and entry of judgment based on a tribal court money judgment is optional, not mandatory. In addition, while La Posta contends “only through recognition” does a tribal court money judgment become enforceable,” the word “only” appears in La Posta’s demurrer, but not in the TCCMJA. Indeed, pursuant to the TCCMJA, the only function for which the TCCMJA purports to be mandatory is enforcement, not recognition: “This chapter applies to all actions to enforce tribal court money judgments … .” (CCP § 1741(b).) As noted above, YAN is not seeking to enforce the tribal court’s money judgment.

Third, La Posta’s citation to Hyundai Securities Co., Ltd. V. Lee (2013) 215 Cal.App.4th 682 is inapposite as it concerned a California judgment that was awarded under the Uniform Foreign-County Money Judgment Recognition Act, Code Civ. Proc. § 1713-1725 (“UFCMJRA”), which is not at issue here. La Posta has failed to present any legal authority indicating YAN cannot seek declaratory relief without an allegation that the Tribal Court Judgment has been recognized in superior court pursuant to the TCCMJA.

In short, the presence or absence of recognition under the TCCMJA does not appear to be a proper ground for demurrer. Further, the complaint sufficiently alleges YAN’s right to a declaration. The complaint alleges an actual controversy has arisen and now exists. (Compl. ¶ 17.) The complaint alleges YAN is entitled to recourse to La Posta’s RSTF distributions, not because of recognition of the Tribal Court Judgment, but because the condition precedent in the SARLA to general recourse has been satisfied. (Compl. ¶ 19.) The SARLA permits YAN greater recourse to La Posta’s assets if there is a final determination, from a court of competent jurisdiction, that La Posta committed any act of fraud. (Compl. Exh. A [SARLA] at 39, § 13.03(a).) YAN has sufficiently alleged each of those elements. (Compl. ¶¶ 7-9, 20.)

Claim Preclusion and Issue Preclusion

The demurrer on these grounds is OVERRULED.

La Posta contends the complaint fails to state facts sufficient to constitute a cause of action because YAN seeks to vindicate the same right here that it sought to vindicate in the San Diego Action (claim preclusion) and because YAN’s right to access La Posta’s RSTF funds was decided in the San Diego Action (issue preclusion).

Res judicata, or claim preclusion, precludes re-litigation of the same cause of action in a second suit between the same parties or parties in privity. Collateral estoppel, or issue preclusion, “precludes re-litigation of issues argued and decided in prior proceedings.” (Johnson v. GlaxoSmithKline (2008) 166 Cal.App.4th 1497, 1507.) Claim preclusion precludes a plaintiff from re-litigating in a new proceeding a claim from a prior proceeding if (1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding are the same as in the prior proceeding, or are in privity with them. (Pitzen v. Superior Court (2004) 120 Cal.App.4th 1374,1381.)

The Court is not persuaded either claim preclusion or issue preclusion apply. In the San Diego Action, YAN sought and received a breach of contract judgment and a jury determination that La Posta did not commit intentional misrepresentation. YAN then sought a determination by a court of competent jurisdiction (the YAN tribal court) that La Posta committed an act of fraud. In neither action did YAN seek a determination as to whether or not it could access La Posta’s RSTF distributions to enforce any judgment received. At its core, this is an enforcement of judgment proceeding, not a redux of the suit in San Diego. While La Posta, by its cross-complaint in the San Diego Action, did attempt to receive a contrary declaration of rights that YAN had no legal right to enforce any future judgment against La Posta’s RSTF distributions, the San Diego Court specifically determined this issue was not yet ripe for adjudication. The Court of Appeal then affirmed this decision. Thus, the issue now before the Court is specifically that issue which was not yet ripe for adjudication and was not determined by the San Diego Court or tribal court.

On reply, La Posta contends that in the San Diego Action YAN conceded it had no viable claim against the RSTF. However, the Court of Appeal Decision precisely states “YAN has no conceded it has no current right to enforce its judgment against La Posta’s RSTF assets. This concession shows there is no controversy regarding the RSTF assets at this time.” (RJN, Exh. A, p. 40 (emphasis added).) As clearly stated, YAN conceded it did not have any current to right at the time to enforce the San Diego Judgment against RSTF, likely because YAN had not yet obtained the Tribal Court Judgment regarding fraud. The Court of Appeal Decision does not evidence that YAN conceded it would never have a viable claim against the RSTF. The San Diego Court and Court of Appeal made clear that the issue was not yet ripe for adjudication. Thus, it is unclear how the issue could have been previously adjudicated as La Posta claims.

Here, the primary right YAN seeks to vindicate in this action is whether, based on the San Diego Judgment, the Tribal Court Judgment, and terms of the SARLA, it is entitled to receive La Posta’s RSTF distributions to satisfy the San Diego Judgment. YAN is not seeking a determination as to whether La Posta breached the SARLA or committed fraud – the causes of action and issue that were previously decided by the San Diego Court and tribal court.

Conclusion

The demurrer is OVERRULED.

La Posta has indicated the incorrect address in its notice of motion. The correct

address for Department 53 of the Sacramento County Superior Court is 813 6th Street, Sacramento, California 95814. La Posta shall notify Plaintiff immediately.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.