2010-00073634-CU-CD

Ashok Rao vs. JTS Communities Inc

Nature of Proceeding: Motion for Leave to Propound Discovery to Oppose Motion to Quash

Filed By: Van Dyke, Glen

Plaintiffs’ motion for leave to engage in pre-hearing discovery to oppose the motion to
quash set for hearing on November 12, 2013, is GRANTED in part as follows:

This is a multi-party construction defect case. Trial is set for January 21, 2014.
Plaintiffs, the homeowners, filed their original complaint on March 24, 2010.
Defendant JTS Communities, Inc. (“JTS”) allegedly was, among other things, the
developer of Plaintiffs’ homes.

Between October 2010 and October 2011, the litigation was stayed so that the parties
could engage in SB800 pre-litigation proceedings. The Special Master was appointed
in January 2012, and the parties mediated unsuccessfully in October 2012 and
January 2013. Discovery did not commence in earnest until after the mediations took
place.

On April 17, 2013, Plaintiffs filed their second amended complaint and named as defendants, among others, Blue Lake Rancheria, Blue Lake Housing Authority, and
Eric Ramos (collectively the “Tribal Defendants”). Plaintiffs contend that the Tribal
Defendants are subcontractors liable for Plaintiffs’ injuries.

The Tribal Defendants have filed a motion to quash service of summons on grounds
that they are immune from suit pursuant to tribal sovereignty. Blue Lake Rancheria
contends that it a federally recognized Indian Tribe. The other Tribal Defendants
contend they are immune from suit because they are an arm of the tribe or an officer of
an arm of the tribe. The hearing on the motion to quash is set for November 12, 2013.

Plaintiffs now request leave to propound written discovery and take oral depositions
directed solely at the Tribal Defendants’ claims of sovereign immunity. Plaintiffs argue
that the Tribal Defendants have waived immunity and/or that they are alter egos of
other, non-tribal defendants. In support of the instant motion, Plaintiffs point to their
allegations that Blue Lake Housing Authority waived sovereign immunity in a 2004
merger agreement. (See SAC, ¶ 13.) Plaintiffs allege that the merger was with non-
tribal companies for the purpose of entering into a joint venture with JTS to construct
Plaintiffs’ homes. (Id., ¶ 9.) Plaintiffs allege that other applicable agreements contain
waivers of sovereign immunity as well. (Id., ¶ 13(c).) Plaintiffs also appear to argue
that, given Blue Lake Housing Authority’s commercial nature, neither it nor its officers
may claim tribal sovereign immunity.

Further, Plaintiffs point to their allegations that the Tribal Defendants and JTS are each
others’ alter egos and have acted to mislead the public and government regulators. (
Id., ¶ 14.) Specifically, Plaintiffs allege that the Tribal Defendants and JTS have
commingled funds, have used business and corporate records interchangeably, have
shared office space and employees, are undercapitalized and underinsured, do not
deal with one another at arm’s length, have used Blue Lake Housing Authority to
procure labor, services and merchandise in order to avoid costs and liabilities
otherwise associated with procurement, and have misused the name “JTS
Communities.” (Id., ¶ 15.) In light of their allegations, Plaintiffs now identify broad
discovery to which they contend they are entitled. (See Moving Memo. at 7:16-10:18.)

The Tribal Defendants have filed an Opposition. They oppose on grounds that (1) the
2004 merger agreement does not contain a waiver of immunity that applies to the
instant lawsuit and (2) Plaintiffs’ motion is actually an overbroad fishing expedition that
would subvert tribal immunity, which protects tribal sovereigns from all facets of
litigation, including discovery.

American Indian tribes, tribal entities, and tribal officers and agents acting within the
scope of their authority are immune from suit in state court absent congressional
authorization to sue or the tribe’s express, clear waiver of its sovereign immunity. (
th
Ameriloan v. Superior Court (2008) 19 Cal.App.4 81, 84, 89, 94; Great Western
th
Casinos v. Morongo Band of Mission Indians (1999) 74 Cal.App.4 1407, 1421.) For-
profit tribal business entities enjoy the same level of immunity with respect to
operations undertaken on the Tribe’s behalf. (Ameriloan , 19 Cal.App.4th at 84.)
Waivers of tribal immunity are strictly construed and go no further than the terms of the
waivers. (Id. at 94-95.)

To determine whether to extend tribal immunity to a particular tribal business entity,
courts consider three relevant factors: (1) whether the business entity is organized for
a purpose that is governmental in nature, rather than commercial; (2) whether the tribe
and the business entity are closely linked in governing structure and other
characteristics; and (3) whether federal policies intended to promote Indian tribal
autonomy are furthered by the extension of immunity to the business entity. (See
Trudgeon v. Fantasy Springs Casino (1999) 71 Cal.App.4th 632, 638-639; see also,
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generally, American Prop. Mgmt Corp. v. Superior Court (2012) 206 Cal.App.4 491
[applying factors announced by the federal Tenth Circuit Court of Appeals]; Trudgeon,
at 639 [“[I]t is possible to imagine situations in which a tribal entity may engage in
activities which are so far removed from tribal interests that it no longer can
legitimately be seen as an extension of the tribe itself.[..s]uch an entity arguably should
not be immune, notwithstanding the fact that it is organized and owned by the tribe”]
[brackets and ellipsis added].)

“‘Tribal immunity extends to individual tribal officials acting in their representative
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capacity and within the scope of their authority.'” ( Trudgeon, 71 Cal.App.4 at 643).
They are not immune if they acted independently of the tribe. ( Great W. Casinos, 74
Cal.App.4th at 1421.)

The law allows discovery on fundamental questions of subject matter jurisdiction so
that the court may be satisfied of its authority to act in the case. ( Warburton/Buttner v.
th
Superior Court (2002) 103 Cal.App.4 1170, 1190.) This allowance for discovery
applies to questions of tribal sovereign immunity. (Id. at 1189-1191.)

Based on the authorities above and the parties’ submissions, the court concludes that
Plaintiffs are entitled to pre-hearing discovery on the issue of sovereign tribal immunity.
However, the court limits the discovery to a total of 10 depositions and 50 document
requests (whether served in conjunction with, or separately from, deposition notices).

Because the court foresees additional discovery disputes (e.g., objections to written
discovery, objections to the scope of depositions), the court directs counsel to meet
and confer to reach a stipulation for the appointment of a discovery referee to resolve
such disputes arising from the pre-hearing discovery at issue. (See CCP §§ 638, 639.)
Plaintiffs shall lodge the stipulation for the court’s signature no later than October 25,
2013.

The Tribal Defendants’ request for monetary sanctions is DENIED.

The court need not and does not rule on the parties’ evidentiary objections. The court
has only considered admissible evidence in making its ruling.

The clerk of the court is directed to continue the hearing on the Tribal
Defendants’ motion to quash to December 18, 2013.

Counsel are advised that the Sacramento County Superior Court’s Local Rules were
revised and renumbered as of 01/01/13. When giving notice of the court’s tentative
ruling system, counsel should cite Local Rule 1.06, not former Local Rule 3.04.

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