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Danka Funding Co. v. Sky City Casino

September 21, 1999


The opinion of the court was delivered by: Walsh, J.S.C.

This matter is before the Court on a motion by Sky City Casino to dismiss the Complaint of Danka Funding Company, LLC "Danka Funding") pursuant to R. 4:6-2 for lack of subject matter jurisdiction or, in the alternative, for summary judgment pursuant to R. 4:46-2. Because the court has considered the Affidavits, Certifications and documents filed by the litigants in arriving at its conclusions, the matter will be dealt with as a motion for summary judgment. For the reasons set forth below, the motion is granted.

The facts are not in dispute. Sky City Casino is a gaming casino operated on lands of the Pueblo of Acoma and is located at Reservation Exit 102, Interstate 40, Pueblo of Acoma, New Mexico. The Pueblo of Acoma is a federally recognized Indian tribe.*fn1 The tribe is the sole owner and operator of the Sky City Casino.

On December 31, 1997, Dennis Wanya, Sky City Casino's comptroller entered into two equipment leases for eight copying machines with Danka Funding's assignor, Danka Business Systems. The leases anticipated monthly payments of $3461.45 and $858.55, respectively, and were assigned to Danka Funding. None of the negotiations preceding the agreements took place in New Jersey and the leases themselves reflect that Danka Business Systems maintained an office in Albuquerque, New Mexico.

Sky City Casino made payments on these leases for approximately eight months. On September 18, 1998, however, attorneys for the casino advised Danka Funding that no further payments would be made and the company was asked to pick up the equipment. Two other letters from the casino's counsel dated November 2, 1998 and November 5, 1998 advised that if the equipment was not picked up by November 15, 1998 "the casino will arrange to have the equipment delivered" to Danka Business System's Albuquerque address.

Danka Funding declared Sky City Casino to be in default for failing to make its regular monthly payments and the future monthly payments were accelerated as permitted under the leases. Interest charges were also assessed. By the close of March 1999, Danka Funding claimed that Sky City Casino owed it $149,782.51.

This lawsuit was commenced on March 31, 1999. Counsel for Danka Funding sought substituted service noting that "[w]e have no information which would lead us to believe that .... [Sky City Casino] has any location or can be served by process in New Jersey. All of our credit records list the .... [Sky City Casino] with out-of-state addresses. There is no address listed in the State of New Jersey in the credit bureau records provided to me by our client ." Substituted service was authorized by this court and copies of the Summons and Complaint were served by certified and regular mail on April 27, 1999.

On June 8, 1999, Sky City Casino moved to dismiss or, in the alternative, for summary judgment. The defendant claims that this court lacks subject matter jurisdiction because the Pueblo of Acoma has sovereign immunity under federal law. The defendant also claims that the court lacks personal jurisdiction over Sky City Casino or the Pueblo of Acoma since neither has the requisite minimum contacts with New Jersey.*fn2

Indian tribes are "domestic dependent nations." United States v. Wheeler, 435 U.S. 313, 323, 98 S.Ct. 1079, 55 L.Ed.2d 303 (1978); Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17, 8 L.Ed. 25 (1831). These nations are under a protectorate relationship with the United States and their territories remain apart from the states in which they are located. See Santa Clara Pueblo v. Martinez, 436 U.S. 49, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978); Worcester v. Georgia, 31 U.S. (6 Pet.) 515, 560-561, 8 L.Ed. 483 (1832); see generally Timothy W. Joranko, Tribal Self-Determination Unfettered: Toward A Rule Of Absolute Tribal Official Immunity From Damages In Federal Court, 26 Ariz. St. L.J. 987 (1994). In 1940, the United States Supreme Court declared that immunity from suit was part of the retained sovereignty of Indian tribes. United States v. United States Fidelity & Guar. Co., 309 U.S. 506, 60 S.Ct. 653, 84 L.Ed. 894 (1940). This aspect of tribal sovereignty has been repeatedly upheld and expanded over the past 59 years on the belief that tribal immunity is "necessary to preserve the autonomous political existence of tribes and to preserve tribal assets." Chemehuevi Indian Tribe v. California State Board of Equalization, 757 F.2d 1047, 1051 (9th Cir.1985). See generally Brian C. Lake, The Unlimited Sovereign Immunity of Indian Tribal Business Operating Outside The Reservation: An Idea Whose Time Has Gone, 1996 Colum. Bus. L.Rev. 87 (1996). These principles of immunity are equally applicable to subordinate organizations of the tribe such as the Sky City Casino. See In re Greene, 980 F.2d 590 (9th Cir.1992); S. Unique Ltd. v. Gila River Pima-Maricopa Indian Community, 138 Ariz. 378, 674 P.2d 1376 (1983); see generally William V. Vetter, Doing Business With Indians And The Three "S"es: Secretarial Approval, Sovereign Immunity, And Subject Matter Jurisdiction, 34 Ariz. L.Rev. 169 (1994).

Recently, the United States Supreme Court made it clear that an Indian tribe enjoys sovereign immunity from a civil suit based on breach of contract, whether the contract is entered into on or off tribal land. Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. 751, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998). Immunity from suit also exists whether the contract involves governmental or commercial activities engaged in by an Indian tribe. Kiowa Tribe, 523 U.S. at 754-55, 118 S.Ct. 1700.

In Kiowa Tribe, 523 U.S. at 756, 118 S.Ct. 1700, the Supreme Court recognized that tribal immunity as a judicial doctrine had "developed almost by accident." The Court also noted that "when tribes take part in the Nation's commerce ... immunity can harm those who are unaware that they are dealing with a tribe, who do not know of tribal immunity, or who have no choice in the matter, as in the case of tort victims." Kiowa Tribe, 523 U.S. at 758, 118 S.Ct. 1700. Nevertheless, the Court reaffirmed the principle of broad sovereign immunity for Indian tribes observing that "Congress, subject to constitutional limitation, can alter its limits through explicit legislation." Id. at 759, 118 S.Ct. 1700.

Danka Funding appears to accept these general legal principles but argues that the Pueblo of Acoma has waived its immunity. The claimed waiver is based on the entry into the equipment leases by the Comptroller of the Sky City Casino in December of 1997. There appears to be no dispute that Sky City Casino entered into these leases with Danka Business Systems, a company with its principal place of business located in Florida.

The lease form used in both these transactions contains a so-called "forum selection clause." Danka Funding essentially admits that there were no negotiations over the forum selection clause. Paragraph 13 of the form lease provides:


Paragraph 14 of the forum lease notifies the Sky City Casino that Danka Business Systems may assign these leases to third parties and advises Sky City Casino "that the assignee will have the same rights under the leases ...." In short, the form leases plainly indicate that the lessee is consenting to ...

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