United States District Court, D. Arizona
ORDER
DOMINIC W. LANZA UNITED STATES DISTRICT JUDGE
INTRODUCTION
This
case involves an attempt by a tribal court to assert
jurisdiction over a party that never set foot within the
tribe's reservation, never contracted with any tribal
members or organizations, and never expressly directed any
activity within the reservation's confines.
Employers
Mutual Casualty Company (“EMC”) is an Iowa-based
insurance company. In 2004, EMC sold commercial general
liability policies to Service Station Equipment and Sales,
Inc (“SSES”) and Milam Building Associates, Inc.
(“Milam”). Neither company has any tribal
affiliation.
While
these insurance policies were in place, SSES and Milam were
each hired to perform certain work on a gas station in
Chinle, Arizona. This gas station was situated on
tribally-owned land within the Navajo Nation reservation. In
March 2005, an employee of a subcontractor that had been
hired by Milam accidentally breached a fuel line. This
breach, which went undetected for five months, caused over
15, 000 gallons of gasoline to leak into the ground. In
response, the Navajo Nation sued an array of parties,
including SSES, Milam, and EMC, in Navajo tribal court. EMC,
in turn, moved to dismiss on the ground that it wasn't
subject to tribal jurisdiction. After the tribal courts
rejected this argument, EMC filed this action in federal
court seeking declaratory and injunctive relief.
As
explained below, the Court agrees with EMC that it isn't
subject to tribal jurisdiction. The Supreme Court has never
held that a tribal court has jurisdiction over a non-member,
and although the Ninth Circuit has issued several decisions
recognizing (or noting the possibility of) such jurisdiction,
those cases have almost exclusively involved instances where
a non-member was physically present on tribal land and
thereafter engaged in the conduct giving rise to liability.
Moreover, to the extent the Ninth Circuit has suggested an
insurance company may be sued in tribal court despite the
absence of any physical presence on tribal land, its
decisions have been limited to circumstances where the
policyholder was a tribal member and the insurance company
engaged in conduct specifically directed toward the
reservation. No. court has ever recognized tribal
jurisdiction under the circumstances presented here, where an
insurance company simply sold a policy to a non-tribal
member. The Court thus concludes this case doesn't
satisfy either of the jurisdictional tests recognized by the
Ninth Circuit: (1) EMC isn't subject to jurisdiction
under the “right to exclude” test because EMC has
never done anything to enter tribal land (and thus can't
be excluded), and (2) neither of the exceptions recognized in
Montana v. United States, 450 U.S. 544 (1981), is
applicable.
BACKGROUND
A.
Underlying Facts
The
following facts are derived from the “Stipulated Facts
re Subject Matter Jurisdiction As To Claims Against Employers
Mutual and Zurich American” that the parties filed
during the tribal court proceedings. (Doc. 1-2 at
93-97.)[1]
This
case concerns a parcel of land in Chinle, Arizona that is
owned by the Navajo Nation and located within the Navajo
Nation reservation. (Id. ¶¶ 1, 5.) In
approximately 1955, the Navajo Nation leased the parcel to
several tribal members, who thereafter began operating a gas
station on the site. (Id. ¶ 6.) In 1997, these
tribal members entered into a sublease with Pic-N-Run, a
company based in Flagstaff, Arizona, to operate the gas
station. (Id. ¶ 7.)
Until
2004, fuel was stored at the site in three underground
storage tanks (“USTs”). (Id. ¶ 12.)
At some point, Pic-N-Run decided to replace the USTs with
above-ground petroleum storage tank systems
(“ASTs”). (Id.) Pic-N-Run hired SSES
and/or another company to assist with the UST-to-AST
conversion and separately hired Milam to perform some other
renovation work. (Id. ¶¶ 11-12.)
At the
time they performed this work, both SSES and Milam were
covered by commercial general liability policies issued by
EMC. (Id. ¶¶ 3, 10, 12.) Neither company
has any tribal affiliation. SSES is “a non-Indian
Arizona corporation whose officer is . . . a non-Indian
individual” and Milam is “a non-Indian Texas
corporation whose officers are . . . both non-Indians.”
(Id. ¶ 3.) Additionally, EMC is not “a
member or member entity of the Navajo Nation, ”
“does not have a contractual relationship with the
Navajo Nation, ” and issued both of the relevant
insurance policies from locations (Show Low, Arizona and
Flagstaff, Arizona) that are not within the Navajo Nation
reservation. (Id. ¶¶ 2, 3, 10, 12.)
In
March 2005, an employee of a subcontractor that had been
hired by Milam accidentally breached a fuel line.
(Id. ¶¶ 12, 13.) This breach, which went
undetected for five months, caused over 15, 000 gallons of
gasoline to leak into the ground. (Id. ¶ 13.)
During a subsequent investigation, it was determined that
multiple other gasoline leaks had occurred on the site
“from the mid-1940s to the mid-1980s and between 1974
and 1978.” (Id. ¶ 16.)
In
August 2009, the United States Environmental Protection
Agency issued an administrative order (the “EPA
Order”) under what's commonly known as the Resource
Conservation Recovery Act (“RCRA”). (Id.
¶ 17.) The EPA Order was issued against various
potentially responsible parties (“PRPs”),
including Milam's officers, the tribal members who had
subleased the land to Pic-N-Run, and Pic-N-Run.
(Id.) SSES was not subject to the EPA Order.
(Id.) Additionally, no insurance companies were
subject to the EPA Order. (Id.)
B.
Procedural History
In
November 2013, the Navajo Nation brought an action in Navajo
tribal court to recover monetary damages and
“nályééh” arising from the
gas leak. (Id. ¶ 1; see also Doc. 1-2
at 61-80 [tribal court complaint].)[2] The defendants named in the
tribal action included, among others, Milam, SES, and EMC.
(Id.)
In
January 2014, EMC filed a motion to dismiss based on a lack
of subject matter jurisdiction and standing. (Doc. 1-2 at
82-91.)
In
February 2018-more than four years later-the tribal court
issued an order denying ...