Hoffman v. Sandia Resort and Casino

Certiorari Denied, March 23, 2010, No. 32,245

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2010-NMCA-034

Filing Date: January 26, 2010

Docket No. 28,444

GARY HOFFMAN,

Plaintiff-Appellant,

v.

SANDIA RESORT AND CASINO,

Defendant-Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY

Linda M. Vanzi, District Judge

Paul Livingston

Placitas, NM

Bregman & Loman, PC

Sam Bregman

Eric R. Loman

Albuquerque, NM

for Appellant

Sutin, Thayer & Browne, PC

Paul Bardacke

C. Shannon Bacon

Albuquerque, NM

Sonosky, Chambers, Sachse, Mielke, & Brownell

David C. Mielke

Albuquerque, NM

for Appellee

1

Norhaus Law Firm, LLP

Wayne H. Bladh

Santa Fe, NM

Rodina Cole Cave

Albuquerque, NM

for Amicus Pueblo of Laguna

Bergen Law Offices, LLC

Lee Bergen

Albuquerque, NM

for Amicus Ohkay Owingeh Pueblo

Sonosky, Chambers, Sachse, Mielke & Brownell

David C. Mielke

Albuquerque, NM

for Amicus Pueblo of Isleta

VanAmberg, Rogers, Yepa, Abeita, & Gomez, LLP

Bryant Rogers

Santa Fe, NM

for Amicus Pueblo of Nambe

Maxine R. Velasquez

San Felipe Pueblo, NM

for Amicus Pueblo of San Felipe

Frank A. Demolli

Santa Fe, NM

for Amicus Pueblo of Pojoaque

OPINION

CASTILLO, Judge.

{1} This case presents us with another question regarding the extent of tribal sovereign

immunity. Appellant Hoffman brought suit in district court based on his claims that Sandia

Resort and Casino (Sandia) wrongfully refused to pay him a gambling prize. Holding that

2

tribal sovereign immunity applies, we affirm the district court’s grant of Sandia’s motion to

dismiss based on lack of subject matter jurisdiction.

BACKGROUND

{2} On August 16, 2006, Hoffman was a visitor at Sandia and began playing the Mystical

Mermaid slot machine. At some point during play, the machine indicated that Hoffman had

won $1,597,244.10. Sandia did not pay any prize money to Hoffman because, according to

Sandia, the machine had malfunctioned and the malfunction voided all play on the machine.

Hoffman followed the regulations of the Sandia Gaming Commission and appealed Sandia’s

determination regarding non-payment. The Commission affirmed Sandia’s decision that

Hoffman was not entitled to any of the award indicated on the machine.

{3} Having exhausted his tribal remedies, Hoffman then filed a complaint in the Second

Judicial District Court alleging breach of contract, prima facie tort, and violation of the

Unfair Practices Act. Sandia filed a motion to dismiss claiming that because the casino was

a wholly-owned, operated, and unincorporated enterprise of the Pueblo of Sandia, sovereign

immunity barred Hoffman’s suit. Hoffman countered by arguing first that there were

disputed facts regarding Sandia’s relationship to Sandia Pueblo (the Pueblo) and the

malfunction of the machine. Hoffman also argued that the Tribal-State Class III Gaming

Compact (Compact), NMSA 1978, §§ 11-13-1 to -2 (1997), entered into between the State

of New Mexico and Sandia waived Sandia’s sovereign immunity with respect to his claims.

The district court rejected Hoffman’s arguments, decided that tribal sovereign immunity

applied, and granted Sandia’s motion to dismiss. This appeal followed.

DISCUSSION

{4} Hoffman’s primary argument on appeal is that the waiver of immunity and choice

of law provisions in Sections 8(A) and 8(D) of the Compact establish that Sandia waived

sovereign immunity with respect to his claims for breach of contract, prima facie tort, and

violation of the Unfair Practices Act. As a preliminary matter, however, Hoffman contends

that factual disputes preclude dismissal. And in his last argument, Hoffman asserts that

sovereign immunity is an anachronistic legal theory and asks us to abandon it and its

application in his case. We address these arguments in reverse order.

A. Abandonment of Sovereign Immunity as a Legal Principle

{5} We may readily dismiss Hoffman’s argument that we should abandon sovereign

immunity as a legal principle. We have no authority to decline to follow precedent

established by our superior courts. See Alexander v. Delgado, 84 N.M. 717, 718, 507 P.2d

778, 779 (1973) (“[A] court lower in rank than the court which made the decision invoked

as a precedent cannot deviate therefrom and decide contrary to that precedent[.]” (internal

quotation marks and citation omitted)).

{6} Both the United States Supreme Court and the New Mexico Supreme Court

recognize tribal sovereign immunity as a legitimate legal doctrine of significant historical

3

pedigree. See Puyallup Tribe, Inc. v. Dep’t of Game, 433 U.S. 165, 172 (1977) (stating that

“it is settled that a state court may not exercise jurisdiction over a recognized Indian tribe”);

Gallegos v. Pueblo of Tesuque, 2002-NMSC-012, ¶ 7, 132 N.M. 207, 46 P.3d 668 (“Indian

tribes have long been recognized as possessing the common-law immunity from suit

traditionally enjoyed by sovereign powers.” (internal quotation marks and citations

omitted)). Accordingly, we will proceed with Hoffman’s remaining argument.

B. Factual Disputes

{7} We now turn to Hoffman’s preliminary argument. He claims that there is a question

of fact regarding the relationships among Sandia Casino, Sandia Pueblo, and the Sandia

Gaming Commission such that he should have been allowed to conduct discovery

“concerning insurance coverage, corporate status and organization, or the facts concerning

the occurrence, investigation, or results of any inquiry” about the non-payment of his

winnings. We disagree.

{8} This matter came before the district court on a motion to dismiss for failure to state

a claim under Rule 1-012(B)(6) NMRA. In reviewing a motion to dismiss for failure to state

a claim, we take the well-pleaded facts alleged in the complaint as true and test the legal

sufficiency of the claims. Envtl. Control, Inc. v. City of Santa Fe, 2002-NMCA-003, ¶ 6,

131 N.M. 450, 38 P.3d 891 (filed 2001). In his complaint, Hoffman identified Sandia as a

resort hotel and casino and made no allegations that Sandia was an entity separate from or

unrelated to Sandia Pueblo.

{9} The complaint does acknowledge that Hoffman went through Sandia’s grievance and

appeal process, thus admitting the connection between Sandia and its gaming commission.

While there are allegations of non-payment, there are no allegations regarding an

investigation or inquiry about the non-payment.

{10} We have concerns about Hoffman’s argument. Generally, the district court need not

allow discovery before granting a Rule 1-012(B)(6) motion. See Rio Grande Kennel Club

v. City of Albuquerque, 2008-NMCA-093, ¶ 10, 144 N.M. 636, 190 P.3d 1131 (concluding

“that the district court was not required to allow [the p]laintiffs to develop the factual record

in order to decide the motions to dismiss”). Here, Sandia, in its motion to dismiss, describes

itself as “a wholly-owned and operated, unincorporated enterprise of the Pueblo of Sandia

. . . , a federally-recognized Indian tribe.” Hoffman does not directly dispute this status;

rather, he complains that he should have been given the opportunity to propound discovery

on this issue and on the issue of the malfunctioning gaming machine before dismissal.

Oddly, however, at no time during the pendency of this suit did Hoffman attempt to file any

discovery requests about any issue in the case. Further, Hoffman provides no citation to

authority for his argument here or below that discovery was required before dismissal.

Issues raised in appellate briefs that are unsupported by cited authority will not be reviewed

by us on appeal. In re Adoption of Doe, 100 N.M. 764, 765, 676 P.2d 1329, 1330 (1984)

(“We have long held that to present an issue on appeal for review, an appellant must submit

argument and authority as required by rule.” (Emphasis omitted.)).

4

C. Sovereign Immunity and Hoffman’s Claims

{11} Hoffman’s argument is straight-forward. He maintains that his claims were properly

brought in district court because the unpaid slot machine winnings constitute property

damage, and Section 8 of the Compact waives sovereign immunity for property damage.

New Mexico case law does not support Hoffman’s position.

{12} Whether Sandia has waived its sovereign immunity with respect to Hoffman’s claims

is a question we review de novo. Holguin v. Tsay Corp., 2009-NMCA-056, ¶ 9, 146 N.M.

346, 210 P.3d 243. “It has long been recognized that Indian tribes have the same

common-law immunity from suit as other sovereigns.” R & R Deli, Inc. v. Santa Ana Star

Casino, 2006-NMCA-020, ¶ 10, 139 N.M. 85, 128 P.3d 513 (filed 2005). Tribal sovereign

immunity precludes state courts from entertaining lawsuits against tribal entities. Gallegos,

2002-NMSC-012, ¶ 7. Corporate entities under tribal control are extended the same

sovereign immunity as the tribe itself. Sanchez v. Santa Ana Golf Club, Inc.,

2005-NMCA-003, ¶ 6, 136 N.M. 682, 104 P.3d 548 (filed 2004). A tribe may waive its

sovereign immunity, but such waivers must be “express and unequivocal.” R & R Deli,

2006-NMCA-020, ¶ 10. “Because a tribe need not waive immunity at all, it is free to

prescribe the terms and conditions on which it consents to be sued, and the manner in which

the suit shall be conducted. Any such conditions or limitations must be strictly construed

and applied.” Id. (internal quotation marks and citations omitted).

{13} As Sandia concedes, the Compact contains specific provisions which effect a limited

and specific waiver of tribal sovereign immunity with respect to the Indian tribes in New

Mexico engaged in gaming. The Compact was negotiated under the comprehensive scheme

of the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701 through 2721 (2000), a seminal

federal statute which “established the framework under which Indian tribes and states could

negotiate compacts permitting . . . gaming on Indian reservations located within state

territory.” Doe v. Santa Clara Pueblo, 2007-NMSC-008, ¶ 6, 141 N.M. 269, 154 P.3d 644

(internal quotation marks and citation omitted). Both the pueblos and the state were

involved in negotiating the terms of the Compact under the Compact Negotiation Act. Id.

“That negotiation process led to the various provisions of the Compact, including Section

8, with which we are concerned in this case.” Doe, 2007-NMSC-008, ¶ 6. As pointed out

by the Amici, all of the Indian tribes engaged in gaming in the State of New Mexico operate

under the same Compact. Amici in this case consists of the Pueblos of Isleta, Laguna,

Nambe, Ohkay Owingeh, Pojoaque, and San Felipe; each Indian tribe is located in New

Mexico and engaged in the enterprise of gaming and subject to the Compact.

{14} Hoffman relies on language in Sections 8(A) and 8(D) of the Compact to establish

that Sandia waived its sovereign immunity with respect to his claims.

{15} Section 8(A) of the Compact provides, in pertinent part:

The safety and protection of visitors to a Gaming Facility is a priority of the

Tribe, and it is the purpose of this Section to assure that any such persons

who suffer bodily injury or property damage proximately caused by the

5

conduct of the Gaming Enterprise have an effective remedy for obtaining fair

and just compensation. To that end, in this Section, and subject to its terms,

the Tribe . . . agrees to a limited waiver of its immunity from suit, and agrees

to proceed either in binding arbitration proceedings or in a court of

competent jurisdiction, at the visitor’s election, with respect to claims for

bodily injury or property damage proximately caused by the conduct of the

Gaming Enterprise. For purposes of this Section, any such claim may be

brought in state district court, including claims arising on tribal land[.]

Id. (internal quotation marks and citation omitted); see R & R Deli, 2006-NMCA-020, ¶ 18.

Section 8(D) of the Compact states that the Pueblo “waives its defense of sovereign

immunity in connection with any claims for compensatory damages for bodily injury or

property damage up to the amount of fifty million dollars ($50,000,000) per occurrence

asserted as provided in this section.” R & R Deli, 2006-NMCA-020, ¶ 18.

{16} As a matter of convenience, we observe that subsections (A) and (D) both fall within

Section 8 of the Compact and both provide a waiver with respect to claims for bodily injury

or property damage. As such, they are plainly part of the same single waiver. Accordingly,

we need not refer to the two provisions independently throughout our discussion. Rather,

we will merely refer to them collectively as the waiver provision of Section 8.

{17} Generally, “Section 8 addresses subject matter jurisdiction over personal injury

claims against the Pueblos resulting from incidents occurring on Indian land in connection

with Class III gaming.” Doe, 2007-NMSC-008, ¶ 8. Our Court has previously addressed

the meaning of the Section 8 waiver language in R & R Deli, 2006-NMCA-020, and

Holguin, 2009-NMCA-056. R & R Deli dealt with a variety of contract and tort claims

brought against tribal entities by a commercial lessee. 2006-NMCA-020, ¶ 6. In affirming

the district court’s dismissal of all claims based on sovereign immunity, we looked to the

intent of the drafters and concluded that they “intended to provide a limited waiver of

sovereign immunity for purposes of providing a remedy to casino patrons who suffer

physical injury to their persons or property.” Id. ¶ 24 (emphasis added). Although we did

not define with specificity what constitutes a physical injury to a casino patron’s person or

property, we did reach two conclusions that provide guidance: (1) personal injury claims

brought by casino patrons are one but not the only form of physical injury clearly

contemplated by the Compact language, R & R Deli, 2006-NMCA-020, ¶¶ 21-22, 24; and

(2) contract law and business tort claims are not claims for physical damage to property as

contemplated by Section 8 of the Compact. R & R Deli, 2006-NMCA-020, ¶ 19.

{18} In our second case, the plaintiff in Holguin won a random drawing for a $250,000

prize at a New Mexico tribal gaming facility. 2009-NMCA-056, ¶ 1. He disagreed with the

manner in which he would be allowed to collect on the prize so he brought suit in district

court for breach of contract, conversion, unfair practices, and for two counts of invasion of

privacy. Id. On appeal, we held that sovereign immunity barred all claims. See id. ¶ 3. We

repeated our holding in R & R Deli: the words “bodily injury” and “property damage” in

Section 8 of the Compact relate to the safety of visitors and mean—as the plain meaning of

the words imply—“physical damage to . . . persons or property.” Holguin, 2009-NMCA-

6

056, ¶ 11.

{19} Hoffman argues that the “personal injury” requirement was wrongly decided in R

& R Deli because the holding was based on interpreting Section 8 to apply to “bodily injury

and property damage” instead of “bodily injury or property damage.” (Emphasis added.)

According to Hoffman, the misappropriation of “and” for “or” permitted us to draw the

incorrect conclusion that the Compact was concerned only with physical injury to the

persons or property of casino patrons. We disagree. Hoffman’s argument is based on a far

too circumscribed reading of our analysis in R & R Deli. Whether the words are connected

by an “and” or an “or” is not determinative. Careful review of the analysis reveals that it

was based on the use of the words “bodily injury” and “property damage” employed together

consistently throughout Section 8 of the Compact. R & R Deli, 2006-NMCA-020, ¶ 21. We

relied on the close juxtaposition of these terms, not the conjunction between them. Id.

{20} Hoffman also disputes the district’s court’s determination that he has no property

damage. According to Hoffman, when the Sandia slot machine indicated that he had won

a jackpot and jackpot rounds totaling approximately 1.6 million, he was entitled to consider

the unpaid winnings his “property.” While he acknowledges his damage was not based on

a direct physical injury to his body, he maintains that it constituted “damage” to his property.

See Kosiba v. Pueblo of San Juan, 2006-NMCA-057, 139 N.M. 533, 135 P.3d 234;

Computer Corner, Inc. v. Fireman’s Fund Ins. Co., 2002-NMCA-054, 132 N.M. 264, 46

P.3d 1264; see also Devlin v. United States, 352 F.3d 525 (2d Cir. 2003). Hoffman argues

that New Mexico law does not require “a physical injury requirement” to his damage claim.

Hoffman misreads the law as it relates to tribal sovereign immunity.

{21} Computer Corner, Inc. concerned an insurance company’s duty to indemnify an

insured. 2002-NMCA-054, ¶¶ 1, 4. The term “property damage” appears in that opinion

because the insurance contract in dispute excluded specific types of property damage as

specifically defined in that contract. Id. ¶¶ 14-19. The case had nothing to do with the use

of this term in the Compact. In Kosiba, the plaintiff alleged that the loss of his gaming

license had been caused by improper governmental action of the Pueblo’s gaming

commission. 2006-NMCA-057, ¶ 12. We held that the plaintiff had no standing to assert

the waiver of immunity contained in Section 8, because the waiver in Section 8 “is limited

to victims of whose injuries are caused by the conduct of the Gaming Enterprise.” Kosiba,

2006-NMCA-057, ¶ 12. We fail to see how this holding advances Hoffman’s case. Lastly,

in Devlin, the Second Circuit was required to interpret the term “injury of loss of property”

under the Federal Tort Claims Act (FTCA). Devlin, 352 F.3d at 529-30. We do not see how

interpretation of the language in the FTCA has any bearing on the interpretation of the

waiver language in the Compact, especially in light of New Mexico law that sets out the

meaning of property damage as contemplated by Section 8. See R & R Deli, 2006-NMCA-

020, ¶ 19 (holding that neither breach of contract nor tort claims constitute property damage

as contemplated by the Compact); see also Holguin, 2009-NMCA-056, ¶ 13 (holding that

invasion of privacy claims and the alleged emotional injuries stemming from those claims

do not constitute property damage as contemplated by the Compact). Rather, the Compact

provides a limited waiver of sovereign immunity for physical damage to casino patrons or

their property proximately caused by the gaming enterprise. Holguin, 2009-NMCA-056, ¶

7

11; R & R Deli, 2006-NMCA-020, ¶¶ 21, 24. The term physical injury or damage refers

literally to the physical destruction or impairment of the tangible property of a casino patron.

See Holguin, 2009-NMCA-056, ¶ 13 (observing that incorporeal claims do not constitute

physical damage to property as contemplated by the Compact).

{22} Hoffman cites to Doe, 2007-NMSC-008, ¶ 18, and he argues that sovereign immunity

does not apply in this case because Sandia’s actions in refusing to pay Hoffman his winnings

are inconsistent with “the effective regulation of Class III Gaming.” Hoffman complains

that there are no regulations, rules, or procedures to ensure that Sandia’s gaming is

conducted fairly and honestly. He also points to Romero v. Pueblo of Sandia, 2003-NMCA-

137, ¶ 15, 134 N.M. 553, 80 P.3d 490, as a case that stands for the proposition that one of

the purposes of the Compact is to ensure that casino gaming is conducted fairly and honestly.

We have difficulty understanding Hoffman’s contentions, but he appears to be arguing that

the Compact covers the regulation of Class III gaming, the Compact must ensure that gaming

is conducted fairly and honestly, Sandia’s non-payment of his jackpot is not fair or honest,

and his only effective remedy is to be able to bring suit in district court. As we explained

in paragraph six above, the doctrine of sovereign immunity applies to Indian tribes. Section

8 of the Compact provides a limited waiver of sovereign immunity for the claims of casino

patrons that are based on physical injury to their persons or property. Hoffman’s claims

cannot be so classified. Sovereign immunity bars his claims.

CONCLUSION

{23} Based on the foregoing, we affirm the ruling of the district court.

{24} IT IS SO ORDERED.

____________________________________

CELIA FOY CASTILLO, Judge

WE CONCUR:

____________________________________

RODERICK T. KENNEDY, Judge

____________________________________

MICHAEL E. VIGIL, Judge

Topic Index for Hoffman v. Sandia Resort and Casino, No. 28,444

CP CIVIL PROCEDURE

CP-MD Motion to Dismiss

CT CONSTITUTIONAL LAW

CT-IM Immunity

8

GV GOVERNMENT

GV-SI Sovereign Immunity

IL INDIAN LAW

IL-GA Gaming

IL-IG Indian Law, General

IL-TC Tribal Court Jurisdiction

IL-TJ Tribal and State Authority and Jurisdiction

JD JURISDICTION

JD-SM Subject Matter

9