Sue/Perior Concrete & Paving, Inc. v. Lewiston Glof Course Corporation

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This opinion is uncorrected and subject to revision before

publication in the New York Reports.

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No. 196

Sue/Perior Concrete & Paving,

Inc.,

Respondent,

v.

Lewiston Golf Course Corporation,

Appellant,

et al.,

Defendants.

Edmund C. Goodman, for appellant.

Gregory P. Photiadis, for respondent.

Seneca Nation of Indians, amicus curiae.

PIGOTT, J.:

Defendant Lewiston Golf Course Corporation (Lewiston

Golf) is an indirect, wholly owned subsidiary of the Seneca

Nation of Indians, a federally recognized Indian tribe. We are

asked to decide whether that corporation is protected from suit

by the Seneca Nation's sovereign immunity. Applying the factors

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set out in Matter of Ransom v St. Regis Mohawk Educ. & Community

Fund (86 NY2d 553 [1995]), we hold that it is not.

I.

In 2002, the Seneca Nation's legislative body, the

Tribal Council, granted a corporate charter to Seneca Gaming

Corporation (Seneca Gaming), under the laws of the Seneca Nation,

to develop, finance, operate and maintain gaming facilities.

Seneca Gaming is wholly owned by the Seneca Nation. In the same

year, again under the laws of the Seneca Nation, the Tribal

Council granted a corporate charter to Seneca Niagara Falls

Gaming Corporation (Seneca Niagara), created as a wholly owned

subsidiary of Seneca Gaming, to develop, finance, operate and

conduct the business of the Nation's gaming operations in Niagara

County specifically. Seneca Gaming and Seneca Niagara are two of

the most financially successful revenue-producing assets of the

Seneca Nation.

Lewiston Golf was incorporated in June 2007, under the

laws of the Seneca Nation, as a wholly owned subsidiary of Seneca

Niagara, to develop, finance, operate and conduct the business of

an 18-hole golf course in the Town of Lewiston. The following

month, it acquired real property from Seneca Niagara, on which to

construct the golf course. The property is not part of any

Indian reservation and is not sovereign land.

As Lewiston Golf's predecessor had explained in its

application to Niagara County Industrial Development Agency for

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tax abatements and deferrals,1 it was "looking to create a

championship level public/semi-private golf course offering the

millions of visitors [to] the Niagara Falls region and the

patrons of the Seneca Niagara Casino & Hotel a new tourist

destination project that will attract golf enthusiasts from

Canada and the United States[,] and to capitalize on the growing

tourist market, which will create new jobs and allow for

prolonged stays in the area."

In resolving to authorize the creation of Lewiston

Golf, the Tribal Council stated that

"the Lewiston Golf Course [would] be

developed and operated as an amenity to

[Seneca Niagara]'s casino operations,

together with the casino's lodging, dining,

retail and entertainment amenities, the

purpose of which amenities is to enhance the

overall success and profitability of the

casino's operations consistent with the

powers described in [Seneca Niagara]'s

charter and the purposes for which [Seneca

Niagara] was formed . . . [T]he use of a

separate corporation or legal entity to own

and operate the Lewiston Golf Course is

advisable due to various legal and accounting

considerations, including the status of the

Lewiston Golf Course as an off-territory

business venture of the Nation, subject to

legal, tax and other requirements that are

not applicable to the Nation's on-territory

business . . . [T]he Nation desires to

1

The application was approved, and eventually Lewiston Golf

and the Niagara County Industrial Development Agency entered into

a Payment-In-Lieu-Of-Tax (PILOT) Agreement, providing for

Lewiston Golf to make payments in lieu of taxes, as well a Lease

Agreement and Leaseback Agreement. In this manner, Lewiston Golf

was granted certain exemptions from real property and sales

taxes.

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establish [Lewiston Golf] as a separate legal

entity, governmental instrumentality of the

Nation, and wholly-owned subsidiary of

[Seneca Niagara], for the purpose of

developing and operating the Lewiston Golf

Course in the Town of Lewiston, New York, and

legally doing business in such

jurisdictions."

Lewiston Golf's charter describes in detail the nature

of the relation between it and the Seneca Nation. The charter

provides that:

• "[n]o activity of [Lewiston Golf] nor any

indebtedness incurred by it shall encumber,

implicate or in any way involve assets of the

Nation or another Nation Entity not assigned or

leased in writing to [Lewiston Golf]"

• "the Nation shall not be liable for the debts or

obligations of [Lewiston Golf], and [Lewiston

Golf] shall have no power to pledge or encumber

the assets of the Nation"

• "[t]he Obligations of [Lewiston Golf] shall not be

a debt of the Nation or of [Seneca Gaming] or any

other Nation-chartered Gaming corporation" and

• "[t]he Company shall not have[ ] any power . . .

to borrow or lend money on behalf of the Nation,

or to grant or permit or purport to grant or

permit any right, lien, encumbrance or interest in

or on any of the assets of the Nation."

On the other hand, the Boards of Directors of Lewiston

Golf, Seneca Gaming, and Seneca Niagara are identical, are

appointed by the Tribal Council, and during this dispute were

composed entirely of enrolled members of the Seneca Nation.

Lewiston Golf, like Seneca Gaming and Seneca Niagara, is required

by its charter to obtain approval from the Seneca Nation before

undertaking significant expenditures of resources or personal

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property; adopting, amending, or repealing corporate by-laws;

providing significant guarantees or incurring significant

liabilities; lending money to other Seneca Nation entities;

buying, selling, or encumbering real property; entering into

financing arrangements involving securities; or entering into,

performing, or canceling contracts with any government or

government agency. Lewiston Golf, like Seneca Gaming and Seneca

Niagara, must keep detailed corporate and financial records and

submit for the Seneca Nation's approval an annual statement of

its financial condition. And Lewiston Golf, once again like

Seneca Gaming and Seneca Niagara, is required to receive consent

from the Seneca Nation before taking such legal actions as

commencing a lawsuit, consenting to a court's jurisdiction, or

waiving a claim to sovereign immunity.

II.

In the summer of 2007, plaintiff Sue/Perior Concrete &

Paving, Inc. (Sue/Perior) entered into a contract with Lewiston

Golf, whereby Sue/Perior would build a golf course on the

property, for the sum of $12,700,000. However, the business

relationship between Sue/Perior and Lewiston Golf deteriorated in

2009. Sue/Perior demanded payment of certain bills; Lewiston

Golf insisted that Sue/Perior was seeking remuneration for work

not done or exaggerating its costs. Sue/Perior filed mechanic's

liens, the third of which is in the amount of $4,130,538, for

materials furnished and labor performed.

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Sue/Perior commenced this foreclosure action against

Lewiston Golf and other defendants in June 2010, with respect to

that mechanic's lien. Lewiston Golf counterclaimed for willfully

exaggerated lien, fraud, breach of contract, and unjust

enrichment. Sue/Perior subsequently amended its complaint to add

additional defendants – Seneca Niagara, Seneca Gaming, and 15

corporate officers and directors – and to assert additional

causes of action for breach of contract, breach of implied

covenant of good faith and fair dealing, quantum meruit,

promissory estoppel, and fraud.2

Seneca Niagara, Seneca Gaming, Lewiston Golf and the

individual defendants moved to dismiss Sue/Perior's complaint

pursuant to CPLR 3211, alleging protection from suit under the

sovereign immunity of the Seneca Nation. Supreme Court denied

the motion to dismiss, ruling, as pertinent here, that Lewiston

Golf did not qualify as an "arm" of the Seneca Nation. Lewiston

Golf appealed. For its part, Sue/Perior withdrew claims against

all defendants except Lewiston Golf.

The Appellate Division affirmed Supreme Court's order,

2

Sue/Perior also commenced a separate action against Seneca

Gaming, Seneca Niagara, and certain individual defendants – but

not Lewiston Golf – alleging tortious interference with contract,

tortious interference with prospective business advantage,

concerted action, and prima facie tort (punitive damages). The

Appellate Division dismissed Sue/Perior's complaint (Sue/Perior

Concrete & Paving, Inc. v Seneca Gaming Corp., 99 AD3d 1203 [4th

Dept 2012]). We take no position on whether that appeal was

properly decided.

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as modified in a manner not relevant here (109 AD3d 80 [4th Dept

2013]). In ruling that Lewiston Golf lacked sovereign immunity,

the Appellate Division relied on our decision in Matter of

Ransom. There, we set out factors for courts to consider when

deciding whether a tribal subagency or a corporate entity

affiliated with an Indian tribe is entitled to sovereign

immunity, as the tribe itself is. The Appellate Division found

that most of the Ransom factors, and in particular those that the

Ransom court "characterized as the '[m]ore important[]' financial

factors, weigh in favor of a determination that [Lewiston Golf]

does not share in the Nation's sovereign immunity" (109 AD3d at

88, quoting Ransom, 86 NY2d at 559 [square brackets in Appellate

Division opinion]). The Appellate Division noted, for example,

that "[Lewiston Golf]'s charter clearly provides that [Lewiston

Golf] has no power to bind or otherwise obligate the funds of the

Nation" and that "the record is devoid of evidence that a lawsuit

against [Lewiston Golf] would adversely impact the Nation's

treasury either directly or indirectly" (109 AD3d at 91).

With respect to the non-financial factor comparing

Lewiston Golf's purposes with those of the Nation, the Appellate

Division found that statements by the Tribal Council and the

documents Lewiston Golf submitted to the Industrial Development

Agency in support of its request for economic assistance "reflect

that the purpose of [Lewiston Golf] . . . is several steps

removed from the purposes of tribal government . . . [T]he

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central purpose of the golf course project was not to provide

funds for traditional governmental programs or services but,

rather, was to serve as a regional economic engine . . . Notably

absent is any reference to improving the quality of life on

reservation lands, creating jobs for Native Americans living on

the reservation, or generating funds to support educational,

social, or other government-related programs for tribal members"

(id. at 89-90 [internal quotation marks omitted]).

Finally, the Appellate Division observed "that

declining to extend sovereign immunity to [Lewiston Golf] under

the circumstances of this case will not diminish the policies

underlying tribal sovereign immunity. . . . Here, permitting

[Lewiston Golf] to retreat behind the Nation's cloak of sovereign

immunity after it held itself out as an independent,

market-participating entity subject to the jurisdiction of the

State of New York, including its courts, would discourage

non-Indians from entering into business relationships with the

Nation's corporations, which may well retard the Nation's

economic growth and undermine one of the purposes of its

sovereign immunity" (109 AD3d at 92 [internal quotation marks,

citations and square brackets omitted]).

The Appellate Division granted Lewiston Golf leave to

appeal to this Court, certifying the question whether its order

was properly made. We now affirm and answer the certified

question in the affirmative.

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III.

Indian tribes possess the common law immunity from suit

traditionally enjoyed by sovereign powers, unless waived. In

Matter of Ransom, we set out several factors3 for courts to use

to determine whether an entity, such as a corporation or agency,

that is affiliated with an Indian tribe has the right to claim

sovereign immunity against suit.

"Although no set formula is dispositive, in

determining whether a particular tribal

organization is an 'arm' of the tribe

entitled to share the tribe's immunity from

suit, courts generally consider such factors

as whether: [1] the entity is organized under

the tribe's laws or constitution rather than

Federal law; [2] the organization's purposes

are similar to or serve those of the tribal

government; [3] the organization's governing

body is comprised mainly of tribal officials;

[4] the tribe has legal title or ownership of

property used by the organization; [5] tribal

officials exercise control over the

administration or accounting activities of

the organization; and [6] the tribe's

governing body has power to dismiss members

of the organization's governing body. More

importantly, courts will consider whether [7]

the corporate entity generates its own

revenue, whether [8] a suit against the

corporation will impact the tribe's fiscal

resources, and whether [9] the subentity has

the power to bind or obligate the funds of

3

Some commentators justifiably refer to our "nine factors"

(see e.g. Gregory J. Wong, Note & Comment, Intent Matters:

Assessing Sovereign Immunity for Tribal Entities, 82 Wash L Rev

205, 220 [2007]), but the last two, or last three, factors have

often been treated as one by courts citing Ransom, generating an

eight-factor or seven-factor test (see e.g. Seneca Niagara Falls

Gaming Corp. v Klewin Bldg. Co., Inc., 2005 WL 3510348 [Superior

Ct of Connecticut, Jud Dist of New London 2005]). We too treat

the last three factors as closely interrelated.

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the tribe. The vulnerability of the tribe's

coffers in defending a suit against the

subentity indicates that the real party in

interest is the tribe." (Ransom, 86 NY2d at

559-560 [internal quotation marks, citations,

and square brackets omitted; numbering

added].)

Applying these factors, we held in Ransom that the St.

Regis Mohawk Education and Community Fund – a nonprofit

corporation, organized under the District of Columbia Nonprofit

Corporation Act, providing educational, health care, social and

historical services to residents of the St. Regis Mohawk

Reservation in Franklin County – was a tribal entity that enjoyed

sovereign immunity from suit. We explained that "[t]he Fund was

established to enhance the health, education and welfare of Tribe

members, a function traditionally shouldered by tribal

government. Additionally, the Fund received its resources from

the Tribe, and the Tribe was designated by the Fund as the

recipient of its funds and services. Critically, under its

by-laws, the Fund's governing body may only be comprised of

elected Chiefs of the Tribe. Thus, the Fund's provision of

social services on behalf of and under the direct fiscal and

administrative control of the Tribe renders it an entity so

closely allied with and dependent upon the Tribe that it is

entitled to the protection of tribal sovereign immunity" (id. at

560).

We begin our discussion of the present appeal with the

functions or purposes factor. The question is whether Lewiston

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Golf's purposes are similar to, or serve, those of the Seneca

Nation. The Appellate Division reasoned that Lewiston Golf's

purposes are significantly different from those of tribal

government, because Lewiston Golf has functioned to develop an

amenity outside the Seneca Nation's reservation land that would

serve as a regional economic engine, not to promote tribal

welfare on the reservation directly.

Lewiston Golf and the dissent rely on Kiowa Tribe of

Okla. v Manufacturing Technologies, Inc. (523 US 751 [1998]), in

which the Supreme Court of the United States held that "[t]ribes

enjoy immunity from suits on contracts, whether those contracts

involve governmental or commercial activities and whether they

were made on or off a reservation" (523 US at 760). In Kiowa

Tribe, a private party sued an Indian tribe for defaulting on a

promissory note, and asked the courts to limit tribal immunity to

suits involving conduct on reservations or involving

noncommercial activities. The Supreme Court refused to create a

"reservation" or a "commercial activity" exception to the

doctrine of tribal sovereign immunity from suit. Recently, a

sharply fractured Supreme Court declined to revisit that decision

(see Michigan v Bay Mills Indian Community, 572 US —, —, 134 S Ct

2024 [2014]).

Lewiston Golf contends that it is inconsistent with

Kiowa Tribe to treat the fact that an Indian tribe's subsidiary

engages primarily in commercial activities not located on the

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tribe's reservation as evidence that the subsidiary is not an

"arm" of the tribe. We disagree. Kiowa and Bay Mills do not

apply in the present appeal, because they concerned lawsuits

against Indian tribes themselves, not against corporate

affiliates of tribes. They do not illuminate questions

concerning whether such an entity is an "arm" of the tribe. The

United States Supreme Court has never held that corporations

affiliated with an Indian tribe have sovereign immunity.

As the Appellate Division notes, the primary purpose of

creating the golf course in Lewiston was to act as a regional

economic engine and thereby serve the profit-making interests of

the Seneca Nation's casino operations in the area. While this

may result in more funds for government projects on the Seneca

Nation's reservations and elsewhere that benefit members of the

tribe, we agree with the Appellate Division that the purposes of

Lewiston Golf were sufficiently different from tribal goals that

they militate against Lewiston Golf's claim of sovereign

immunity. However, the purposes factor of Ransom is not

determinative, and we proceed to discuss the other criteria.

While some of the remaining Ransom factors favor the conclusion

that Lewiston Golf is protected by sovereign immunity, the most

important ones strongly support the opposite conclusion.

IV.

It is true that Lewiston Golf was organized under

tribal law, not federal law, and that Lewiston Golf's governing

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body is comprised of tribal officials. The Seneca Nation

controls Lewiston Golf's Board of Directors, which is made up

exclusively of enrolled members of the Nation appointed by the

Tribal Council. Moreover, it is clear from the record that

tribal officials exercise control over the administration or

accounting activities of Lewiston Golf, and that the tribe's

governing body has power to dismiss members of Lewiston Golf's

governing body. Indeed, the Tribal Council has exclusive

authority to remove members of Lewiston Golf's Board. These

considerations indicate that Lewiston Golf is dependent on the

Seneca Nation in a manner that might suggest it partakes in the

Nation's sovereign immunity.

However, all the remaining Ransom factors, and

particularly those that consider the financial relationship

between the subsidiary or agency and the Indian nation, support

the conclusion that Lewiston Golf lacks sovereign immunity.

First, the Seneca Nation does not have legal title or

ownership of the golf course being developed by Lewiston Golf.

Contrary to the Seneca Nation's contention, the question posed by

this factor is not whether Lewiston Golf is owned by the tribe.

Rather, the issue is whether the property used by Lewiston Golf

is owned by the tribe, and the record leaves no room for doubt

that the owner of the golf course is Lewiston Golf, not the

Seneca Nation.

Next, and most significantly, the record firmly

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indicates the intent to ensure that a suit against Lewiston Golf

will not impact the Seneca Nation's fiscal resources. The

founding charter provided that no indebtedness incurred by it

would "in any way involve assets of the Nation . . .", which

would "not be liable for the debts or obligations" incurred by

Lewiston Golf. The charter stated that Lewiston Golf would have

no power to allow "any right, lien, encumbrance or interest in or

on any of the assets of the Nation." All the evidence in the

record points to the conclusion that Lewiston Golf lacks the

power to bind or obligate the funds of the Seneca Nation.

In response, Lewiston Golf does not deny that the

statements in the charter have their ordinary meaning and that

the Seneca Nation intended to create a corporation for whose

debts it would not be liable. Lewiston Golf does not contend

that the Seneca Nation's independent coffers are vulnerable.

Rather, it argues that a lawsuit against Lewiston Golf would have

an economic impact on the Seneca Nation because revenues that

would otherwise be distributed to the Nation will not be

available. Lewiston Golf expressly concedes that it generates

its own revenue, rather than being dependent on the resources of

the Seneca Nation.

Whether Lewiston Golf's revenues will become part of

the Seneca Nation's resources, as Lewiston Golf emphasizes, is

beside the point. The test, with respect to the financial

relationship factors of Ransom, is not the indirect effects of

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any liability on the tribe's income, but rather whether the

immediate obligations are assumed by the tribe. Here, the

financial obligations were assumed by Lewiston Golf and any

liability insurer, not by the Seneca Nation.

These financial relationship considerations are the

most important of the Ransom factors, as we noted when we first

set out the criteria (see Ransom, 86 NY2d at 559). In

attributing such weight to them, we have taken into consideration

federal precedent on the Eleventh Amendment immunity of States.

While the sovereign immunity of an Indian tribe is not based on

the Federal Constitution, it has in common with Eleventh

Amendment immunity "a background of traditional ideas about the

power and privileges of the sovereign" (Runyon v Ass'n of Vill

Council Presidents, 84 P3d 437, 440 n 12 [Sup Ct of Alaska 2004];

see Thebo v Choctaw Tribe of Indians, 66 F 372, 376 [8th Cir

1895]). In considering whether an entity is an "arm" of an

Indian tribe, the most significant factor is the effect on tribal

treasuries, just as "the vulnerability of the State's purse" is

considered "the most salient factor" in determinations of a

State's Eleventh Amendment immunity (Hess v Port Authority

Trans-Hudson Corporation, 513 US 30, 48 [1994]).

If a judgment against a corporation created by an

Indian tribe will not reach the tribe's assets, because the

corporation lacks "the power to bind or obligate the funds of the

tribe" (Ransom, 86 NY2d at 559), then the corporation is not an

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"arm" of the tribe. However, if a tribe is legally responsible

for a corporation's obligations, the tribe is "the real party in

interest" (id. at 560). As the Supreme Court of Alaska has

observed, in a thoughtful opinion, "a tribe might, for commercial

purposes, wish to form a corporation exposed to suit in order to

cultivate trust with business partners. . . . The tribes' use of

the corporate form protects their assets from being called upon

to answer the corporation's debt. But this protection means that

they are not the real party in interest" (Runyon, 84 P3d at 441;

accord e.g. American Property Management Corp. v Superior Court,

206 Cal App 4th 491, 506 [Ct of App of California, 4th App Dist,

Div One 2012]; Uniband, Inc. v Commissioner of Internal Revenue,

140 TC 230, 255 [US Tax Ct 2013]; Seaport Loan Prods., LLC v

Lower Brule Community Dev. Enter. LLC, 41 Misc 3d 1218 [A] [Sup

Ct NY County 2013]).4 In short, protection of a tribal treasury

against liability in a corporate charter is strong evidence

against the retention of sovereign immunity by the corporation.

The dissent's principal objection to our ruling is that

lower courts have found that Seneca Gaming and Seneca Niagara

have sovereign immunity (see dissenting op at 7-12, citing

Sue/Perior Concrete & Paving, Inc., 99 AD3d 1203; Seneca Niagara

4

While the Alaska Supreme Court's opinion concerned a

nonprofit corporation shielding members from liability under

state law, not tribal law, its analysis is equally pertinent here

in that the Seneca Nation created a corporation with a charter

expressly protecting the Nation from liability.

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Falls Gaming Corp., 2005 WL 3510348; Warren v United States, 859

F Supp 2d 522 [WD NY 2012], affd 517 Fed Appx 54 [2d Cir 2013];

Myers v Seneca Niagara Casino, 488 F Supp 2d 166 [ND NY 2006]).

Neither this Court nor the United States Supreme Court has so

held, and our decision today may imply the opposite. As noted

above, the question whether a corporate affiliate of an Indian

tribe is protected by the tribe's sovereign immunity has not been

settled by the United States Supreme Court.5 Therefore, even

assuming that it is a pure question of federal law, we remain at

liberty to answer it in a manner that may conflict with the

determinations of courts in our federal circuit. Contrary to the

dissent, New York State courts are not bound by the decisions of

federal courts other than the United States Supreme Court, on

questions of federal constitutional law (see Arthur Karger,

Powers of the New York Court of Appeals § 1:8 at 18 [3d ed rev

2005]). It is well-established that "the interpretation of a

Federal constitutional question by the lower Federal courts may

serve as useful and persuasive authority for our Court while not

binding us. This Court in its long-standing tradition and

independent responsibility has exercised its correlative

adjudicative power on questions of Federal law" (People v Kin

5

Nor has it been addressed by the United States Court of

Appeals for the Second Circuit, which treated the question

cursorily in a summary order that lacks precedential force (517

Fed Appx 54; see 2nd Cir Local Rule 32.1.1 [providing that

decisions "by summary order do not have precedential effect"]).

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Kan, 78 NY2d 54, 60 [1991] [citations omitted] [emphasis added],

citing New York R.T. Corp. v City of New York, 275 NY 258, 265

[1937], affd 303 US 573 [1938] [noting that a decision of the

Second Circuit, "while entitled to great weight, is not binding

on this court"]; see also e.g. People v Konstantinides, 14 NY3d

1, 13 [2009]; Matter of Mason, 100 NY2d 56, 58 [2003]). The same

principle applies here.

Alternatively, it could be argued that Seneca Gaming

and Seneca Niagara are distinguishable from Lewiston Golf in that

their purposes are more closely aligned with those of the Seneca

Nation. In any case, that question is not before us, and the

dissent simply begs the question, assuming – what has not been

held by this Court or the Supreme Court – that Lewiston Golf's

corporate parents have sovereign immunity.

In conclusion, we agree with the Appellate Division

that the most significant Ransom factors count against sovereign

immunity on the part of Lewiston Golf. Its ruling was proper.

It is unnecessary for us to address the parties' remaining

contentions.

Accordingly, the order of the Appellate Division should

be affirmed, with costs, and the certified question answered in

the affirmative.

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Sue/Perior Concrete & Paving, Inc. v Lewiston Golf Course Corp.

No. 196

RIVERA, J.(dissenting):

The question on this appeal is whether a corporate

subsidiary of a corporation owned and controlled by an Indian

Tribe, and which exists solely for the economic benefit of the

tribe and its members, is immune from private suit based on the

Tribe's sovereign immunity. I can find no rational legal basis

to distinguish between the corporate parent, which is a

recognized arm of the Tribe, and its subsidiary. Therefore, I

would find the subsidiary is immune from suit.

I.

The Seneca Nation of Indians ("the Nation") is a

sovereign Tribe, predating the creation of the United States,

with its own government, laws and cultural identity (see Indian

Entities Recognized and Eligible To Receive Services From the

United States Bureau of Indian Affairs, 79 Fed Reg 4748-02

[2014]; Seneca Nation of Indians v State of N.Y., 26 F Supp 2d

555, 560 [WD NY 1998], affd sub nom Seneca Nation of Indians v

New York, 178 F3d 95 [2d Cir 1999]). As a tribal sovereign it

provides its members with various health and education-related

services and programs, which are dependent on the Nation's

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financial stability and well-being. The Nation has identified

the gaming industry as "vitally important to the economy of the

Nation and the general welfare of its members" (Seneca Gaming

Corporate Charter Law Enactment, Council of the Seneca Nation of

Indians, August 1, 2002). As part of its economic development

activities it has created and chartered, under the Nation's

corporate charter, three interlocking corporate entities,

intended to further the Nation's gaming operations, all for the

benefit of its members.

The Nation created the Seneca Gaming Corporation

("Seneca Gaming") to "finance, develop, construct, operate, and

maintain Nation Gaming Facilities." The Nation then created the

Seneca Niagara Falls Gaming Corporation ("Seneca Niagara Falls

Gaming") as a subsidiary of Seneca Gaming, for purposes of

"developing, financing, operating and conducting the business of

the Nation Gaming Facility" on Nation territory located in

Niagara County, New York.1 Seneca Niagara Falls Gaming is

subject to the "control, operation and management" of Seneca

Gaming.

The Nation decided to capitalize on the subsequent

success of its gaming operations, and Seneca Niagara Falls Gaming

commenced development of a golf course in the Town of Lewiston,

New York in Niagara County. The Nation thereafter created the

1

The Nation Gaming Facility operates in accordance with the

Indian Gaming Regulatory Act ("IGRA") and the Compact between the

Nation and New York State.

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Lewiston Golf Course Corporation ("Lewiston Golf") "as a separate

legal entity, governmental instrumentality of the Nation, and

wholly-owned subsidiary of [Seneca Niagara Falls Gaming], for the

purpose of developing and operating the Lewiston Golf Course."

All three of the Nation's resolutions creating Seneca

Gaming, Seneca Niagara Falls Gaming, and Lewiston Golf, and their

respective corporate charters provide

"it is declared the policy of the Nation to

promote the welfare and prosperity of its

members and to actively promote, attract,

encourage and develop economically sound

commerce and industry through governmental

action for the purpose of preventing

unemployment and economic stagnation; and the

economic success of the Nation’s gaming

operations is vitally important to the

economy of the Nation and the general welfare

of its members."

Plaintiff Sue/Perior Concrete & Paving, Inc., a

contracting company who had previously done business with the

Nation, entered a contract with Lewiston Golf to construct the

golf course. After certain payment disputes, plaintiff filed a

mechanic's lien foreclosure action against Lewiston Golf in

Niagara County. Plaintiff also filed an action in Erie County

against several of the same defendants, with the exception of

Lewiston Golf, but Erie County Supreme Court dismissed that

action based on the sovereign immunity of Seneca Gaming and

Seneca Niagara Falls Gaming.

Lewiston Golf moved to dismiss the action, asserting

sovereign immunity against suit as an arm of the Nation. Supreme

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Court and the Appellate Division both rejected this contention,

and held that Lewiston Golf is not an arm of the Nation. The

majority now agrees, and based on Matter of Ransom v St. Regis

Mohawk Educ. and Community Fund, Inc. (86 NY2d 553 [1995])

concludes that because Lewiston Golf is without power to bind or

obligate the Nation's funds it lacks a sufficient financial

relationship with the Nation to entitle it to sovereign immunity.

I disagree with the majority that certain financial

factors identified by this Court in Ransom and as applied here,

should be treated as outcome determinative of the question of the

expanse of the Nation's sovereign immunity over its corporate

subsidiary Lewiston Golf. Instead, our focus should be the

purpose and corporate structure of Lewiston Golf. As a corporate

entity created and chartered by the Nation, established to

enhance the Nation's gaming operations for the purpose of

benefitting the Nation's members, I would hold Lewiston Golf is

clothed with the Nation's sovereign immunity.

II.

Tribes are " 'separate sovereigns preexisting the

[United States] Constitution' " (Michigan v Bay Mills Indian

Community, 134 S Ct 2024, 2030 [2014], quoting Santa Clara Pueblo

v Martinez, 436 US 49, 56 [1978]), and possess " 'common-law

immunity from suit traditionally enjoyed by sovereign powers' "

(id., quoting Santa Clara Pueblo, 436 US at 58). Indeed,

"sovereign immunity is an inherent part of the concept of

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sovereignty and what it means to be a sovereign" (Breakthrough

Mgt. Group, Inc. v Chukchansi Gold Casino and Resort, 629 F3d

1173, 1182 [10th Cir 2010]), and "is 'a necessary corollary to

Indian self-governance' " (Bay Mills Indian Community, 134 S Ct

at 2030, quoting Three Affiliated Tribes of Fort Berthold

Reservation v Wold Engineering, P.C., 476 US 877, 890 [1986], and

citing The Federalist No. 81, p. 511 [B. Wright ed. 1961] [A.

Hamilton] [It is “inherent in the nature of sovereignty not to be

amenable” to suit without consent]). Sovereignty immunity serves

interests essential to tribal identity, and is fundamental to the

survival and growth of Tribes and their members. Moreover,

immunity is " 'necessary to promote the federal policies of

tribal self[-]determination, economic development and cultural

autonomy' " (Breakthrough Mgt. Group, Inc., 629 F3d at 1182

[modification in original], quoting Am. Indian Agric. Credit

Consortium, Inc. v Standing Rock Sioux Tribe, 780 F2d 1374, 1378

[8th Cir 1985]).

The United States Supreme Court has broadly applied

tribal sovereign immunity to extend to "suits on contracts,

whether those contracts involve governmental or commercial

activities and whether they were made on or off" Indian lands

(Kiowa Tribe of Oklahoma v Mfg. Tech., Inc., 523 US 751, 760

[1998]; see also Bay Mills Indian Community, 134 S Ct at

2030-31). There are no exemptions for tribal commercial activity

(see Cayuga Indian Nation of New York v Seneca County, N.Y., 761

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F3d 218, 221 [2d Cir 2014]), and, thus, sovereign immunity

extends to tribal business ventures (Oklahoma Tax Com'n v Citizen

Band Potawatomi Indian Tribe of Oklahoma, 498 US 505, 510

[1991]). Immunity may be limited only by Congress or express

waiver of a tribe (Kiowa, 523 US at 754).

Unsurprisingly, "tribes across the country, as well as

entities and individuals doing business with them, have for many

years relied on [Supreme Court precedent], negotiating their

contracts and structuring their transactions against a backdrop

of tribal immunity" (Bay Mills Indian Community, 134 S Ct at

2036, referencing Kiowa, 523 US 751). Over the years tribal

activities have grown, "tribal gaming revenues have increased

more than thirty fold," and "other tribal enterprises, ranging

from cigarette sales to ski resorts" have flourished (Bay Mills

Indian Community, 134 S Ct at 2037; see id. at 2050-2051 [Thomas,

J., dissenting]). "[T]ribal business operations are critical to

the goals of tribal self-sufficiency because such enterprises in

some cases 'may be the only means by which a tribe can raise

revenues.' This is due in large part to the insuperable (and

often state-imposed) barriers Tribes face in raising revenue

through more traditional means" (id. at 2043 [Sotomayor, J.,

concurring] [citations omitted]).

III.

As federal courts have held, the Seneca Nation of

Indians has immunity from suit based on its status as a sovereign

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Indian Nation (Seneca Nation of Indians, 178 F3d 95) and that

Seneca Niagara Falls Gaming and Seneca Gaming are arms of the

Nation (Warren v United States, 859 F Supp 2d 522, 540 [WD NY

2012], affd 517 Fed Appx 54 [2d Cir 2013]; Myers v Seneca Niagara

Casino, 488 F Supp 2d 166 [ND NY 2006]) fully clothed with the

Nation's sovereign immunity. The question of whether Lewiston

Golf, another subentity of the Nation, may assert sovereign

immunity then seems a rather straightforward one, and one which

should be decided in Lewiston Golf's favor.

Tribal sovereignty, including immunity from suit, "is

subject to the superior and plenary control of Congress [and]

without congressional authorization, the Indian Nations are

exempt from suit" (Santa Clara Pueblo, 436 US at 58] [quotation

marks and citation omitted]). As such, tribal immunity is "a

matter of federal law and is not subject to diminution by the

States" (Kiowa, 523 US at 756). The Nation is a sovereign with

its own government and rights to self-determination, and as such

empowered to determine how best to structure its business

ventures. Therefore, we are without authority absent

congressional limitation, to reject the Nations's adoption of a

corporate structure that furthers its economic development goals.

The majority relies on this Court's decision in Ransom

for the legal framework by which to decide Lewiston Golf's

sovereign immunity. However, Ransom was decided before the

United States Supreme Court announced its decisions in Kiowa and

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Bay Mills Indian Community recognizing sovereign immunity applied

broadly to Indian business ventures, even those outside Indian

lands. Therefore, the factors in Ransom cannot supercede federal

proscriptions, and we must be cautious not to rely on these

factors in a way that conflicts with federal law.

The record makes abundantly clear that the Nation

created Lewiston Golf as a commercial business venture to

increase the Nation's gaming revenues for the benefit of the

Tribe and its members. The Nation determined that the best way

to pursue this goal is through a corporate structure whereby

Lewiston Golf is controlled by the Nation's corporate entity. As

a sovereign, the Nation is certainly able to decide that this

corporate arrangement will enhance its economic independence and

sustain its tribal membership and self-sustaining tribal

government. The Nation, having made that choice, is no less

entitled to expect that the protections afforded by its sovereign

immunity will apply equally to the activities of Lewiston Golf as

it does to the activities of Seneca Gaming and Seneca Niagara

Falls Gaming.

The logic of treating uniformly the corporate entities

for sovereign immunity purposes is illustrated by comparing

Lewiston and Seneca Niagara Falls Gaming. As their respective

corporate charters reveal, Seneca Niagara Falls Gaming and

Lewiston Golf are strikingly similar, both are owned by an arm of

the Nation (Seneca Gaming in the case of Seneca Niagara Falls

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Gaming, and Seneca Niagara Falls Gaming in the case of Lewiston

Golf), and both are controlled and run by the Nation. Both seek

to increase the Nation's revenue, with the obvious difference

that Niagara Falls Gaming was created for the "purpose of

developing, constructing, owning, leasing, operating, managing,

maintaining, promoting and financing a Nation Gaming Facility on

Nation territory within the exterior boundaries of Niagara County

pursuant to the terms of the [gaming] Compact," and Lewiston

Golf's purpose is to "develop[], construct[], own[], leas[e],

operat[e], manag[e], maintain[], promot[e] and financ[e] the

Lewiston Golf Course on land" which at the time of Lewiston

Golf's creation was owned by Seneca Niagara Falls Gaming. Thus,

one exists to maintain a casino for the Nation's benefit, the

other exists to maintain a golf course to enhance casino revenues

for the Nation's benefit. Both improve the Nation's economic

position. Moreover, not only are they similar in purpose and

service to the Nation and its members, but Lewiston Golf is

intended as an amenity to the casino to "further the economic

success of the Nation's gaming operations." The point of both

business enterprises is to bring revenues to the Nation.2 If the

golf course was owned by Seneca Niagara Falls Gaming, a

2

There is certainly nothing unique in establishing a golf

course as an economic development venture. As Lewiston Golf

points out, New York has several public golf courses that are

public amenities that "create jobs and support economic

development."

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recognized arm of the Nation, there would be no question that

sovereign immunity would foreclose plaintiff's suit against

Lewiston Golf. Consequently, there is no logical basis to treat

Lewiston Golf differently simply because it is a subsidiary of

Seneca Niagara Falls Gaming.

Therefore, I can find no legally defensible ground for

rejecting sovereign immunity to Lewiston Golf, a corporate entity

that is established under the Nation's laws and constitution,

chartered by the Nation to develop, construct and operate a golf

course in furtherance of the Nation's existing gaming operations,

and, consistent with the Seneca Niagara Falls Gaming charter,

controlled by Nation officials who make all significant business

decisions. Like its parent Seneca Niagara Falls Gaming, Lewiston

Golf is an engine for tribal economic development and growth.

The majority claims that there is no legal support for

presuming Seneca Gaming and Seneca Niagara Falls Gaming's

sovereign immunity. However, in Warren the district court, as

affirmed by the Second Circuit, held that Seneca Gaming "is a

government instrumentality entitled to immunity" (859 F Supp 2d

at 541), finding specifically that Seneca Gaming

"is incorporated under Seneca tribal law; it

was created to generate income to provide for

the general welfare of [the Nation's]

members; a majority of the board of directors

are enrolled Senecas; [Seneca Gaming's]

principal place of business is on the

Cattaraugus reservation; all important

corporate acts require approval of the tribal

Council; the tribal Council may remove

[Seneca Gaming] board members for cause"

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(id.). In Myers, the district court stated that Seneca Niagara

Falls Gaming "enjoys all of the privileges and immunities of the

Nation" (Myers v Seneca Niagara Casino, 488 F Supp 2d at 168 n

2). Thus, it is undisputed that under federal law these entities

are entitled to the Nation's sovereign immunity.

Nevertheless, the majority casts these decisions to the

wind, and asserts that in the instant appeal it may ignore

federal precedent and place in question sovereign immunity as it

applies to the Seneca Gaming and Seneca Niagara Falls Gaming, and

a fortiori Lewiston Golf (majority op, at 17). According to the

majority, it is free to apply outdated decisions, propound

unfounded conclusions, and clear its own path on the question of

sovereign immunity until such time as the United States Supreme

Court speaks on the issue. Well the Supreme Court has spoken,

and we are bound to comply with its pronouncement that tribal

sovereign immunity is a federal matter "not subject to diminution

by the states" (Kiowa, 523 US at 756). Thus, our Court is

without authority to render tribal commercial activities

meaningless by subjecting tribal entities to suit in

contravention of federally recognized immunity. Consequently,

with respect to Seneca Gaming and Seneca Niagara Falls Gaming the

law is currently settled in New York that they are arms of the

Nation and clothed with sovereign immunity.3

3

Realizing that it cannot avoid federal law, the majority

opines that perhaps Lewiston Golf is different from the other

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Implicit in the majority's argument for rejecting

Lewiston Golf's claim is the notion that the corporate form, and

the protections therein, categorically bars the extension of

sovereign immunity. This is simply an irrelevant consideration

because the sovereign immunity of a tribe extends to its

subordinate economic entities (see e.g. Native Am. Distrib. v

Seneca-Cayuga Tobacco Co., 546 F3d 1288 [10th Cir 2008] [tobacco

manufacturer]), including corporate entities (see e.g. Memphis

Biofuels, LLC v Chickasaw Nation Industries, Inc., 585 F3d 917,

921 [6th Cir 2009] [tribal conglomerate was an arm of the Tribe;

incorporating under 25 USC § 477, i.e. a Section 17 corporation,

did not automatically waive tribal sovereign immunity]; Koscielak

v Stockbridge-Munsee Community, 340 Wis 2d 409, 418 [2012] [golf

course and supper club], review granted, 342 Wis 2d 155]).

The majority rests its decision on Lewiston Golf's

apparent inability to bind or obligate the funds of the Seneca

Nation. As noted above, the financial and administrative duties

and obligations of Lewiston Golf vis-a-vis the Seneca Nation are

nearly identical to those of Seneca Niagara Falls Gaming.

Seneca corporate entities because the purposes of Seneca Gaming

and Seneca Niagara Falls Gaming are more aligned with those of

the Nation (majority op, at 18). The record belies any such

distinction. Indeed, the corporate charters are quite clear that

the purpose of these three entities is to benefit the Nation and

its members through "government action for the purpose of

preventing unemployment and economic stagnation," achieved

through the economic success of the Nation's gaming operations.

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According to their charters, neither can bind nor obligate the

funds of the Seneca Nation. Yet, Seneca Niagara Falls Gaming is

an arm of the tribe (see Sue/Perior Concrete & Paving, Inc. v

Seneca Gaming Corp., 99 AD3d 1203 [4th Dept 2012]; Seneca Niagara

Falls Gaming Corp. v Klewin Bldg. Co., Inc., 2005 WL 3510348, at

*5 [Conn Super Ct Nov. 30, 2005] [Niagara Falls Gaming, which is

a wholly owned subsidiary of Seneca Gaming is a governmental

instrumentality of the Seneca Nation]; Warren, 859 F Supp 2d at

540-41 [Seneca Gaming entitled to immunity; finding Seneca Gaming

charter provisions incorporated in all relevant respects into the

Seneca Niagara Falls Gaming charter], citing Klewin Bldg. Co.,

Inc., 2005 WL 3510348, at *5, affd 517 Fed Appx 54 [2d Cir 2013];

Myers, 488 F Supp 2d at 168 n 2).

In deciding the expanse of sovereign immunity, our

focus should be on the purpose and goals of the corporate entity.

We should look to whether the corporate entity furthers tribal

self-determination and self-governance, and as such, benefits the

tribe's members. Therefore, I would not rely primarily on

Ransom's financial interconnectedness factors. Indeed, federal

and state courts have criticized the multi-factor approach to

subordinate economic analysis as contravening Kiowa (see Kiowa,

523 US at 754-55; Breakthrough Mgt. Group, Inc., 629 F3d at 1185-

89 [expressly overruling district court's holding that financial

interconnectedness is a threshold factor]; Cash Advance and

Preferred Cash Loans v State, 242 P3d 1099, 1110 n 12 [Colo 2010]

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[distinguishing Ransom as pre-Kiowa]). Moreover, Runyon, also a

pre-Kiowa case, was an expressly narrow ruling, which relied on

Ransom and Alaska corporate law (Runyon v Ass'n of Vill Council

Presidents, 84 P3d 437, 441 [Sup Ct of Alaska 2004], citing

Alaska Stat § 10.20.051 [b]).

IV.

Plaintiff argues that even if Lewiston Golf is entitled

to sovereign immunity, that immunity has been waived and thus it

is subject to suit. I can find no basis in law or the record to

support waiver. As the United States Supreme Court has made

clear, "an Indian tribe is subject to suit only where Congress

has authorized the suit or the tribe has waived its immunity"

(Kiowa, 523 US at 754). Just this past term, in Michigan v Bay

Mills Indian Community, the Supreme Court reaffirmed, not only

that it is for Congress "to abrogate tribal immunity for

off-reservation commercial conduct," but that Congress has chosen

not to do so (134 S Ct at 2031).

As the court in Ransom recognized, "preserving tribal

resources and tribal autonomy are matters of vital importance"

and waiver of "sovereign immunity cannot be implied but must be

unequivocally expressed" (Ransom, 86 NY2d at 560-61, quoting

Santa Clara Pueblo, 436 US at 58 [internal quotations marks

omitted]). "[W]aivers are strictly construed in favor of the

tribe" (Ransom, 86 NY2d at 561, quoting Rupp v Omaha Indian

Tribe, 45 F3d 1241, 1245 [8th Cir 1995] [internal quotations

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marks omitted]).

Plaintiff's contract with Lewiston Golf lacks any

express waiver of sovereign immunity. Plaintiff seeks to avoid

sovereign immunity arguing that Lewiston Golf is subject to suit

for the mechanics lien foreclosure. However, courts have failed

to recognize the distinction between in rem and in personum

jurisdiction asserted by the respondent (see Cayuga Indian Nation

of New York, 761 F3d 218, 220; Oneida Indian Nation of New York v

Madison County, Oneida County, N.Y., 605 F3d 149, 159 [2d Cir

2010]; vacated on other grounds and remanded sub nom. Madison

County, N.Y. v Oneida Indian Nation of New York, 562 US 42

[2011]). Regardless, the suit ultimately seeks to enforce

Lewiston Golf's alleged debt to the plaintiff, and does not seek

title to the land, so even plaintiff's in rem theory must fail.

I would reverse the Appellate Division because Lewiston

Golf is entitled to sovereign immunity, therefore I dissent.

* * * * * * * * * * * * * * * * *

Order affirmed, with costs, and certified question answered in

the affirmative. Opinion by Judge Pigott. Judges Graffeo, Smith

and Abdus-Salaam concur. Judge Rivera dissents in an opinion in

which Chief Judge Lippman and Judge Read concur.

Decided November 25, 2014

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