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Shingobee Builders, Inc. v. North Segment Alliance

United States District Court, D. North Dakota

October 1, 2018

Shingobee Builders, Inc, Plaintiff,
v.
North Segment Alliance, Defendant.

          ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

          DANIEL L. HOVLAND, CHIEF JUDGE

         Before the Court is the Defendant's motion to dismiss the complaint filed on April 16, 2018. See Docket No. 8. The Plaintiff filed a response on May 7, 2018. See Docket No. 12. On May 21, 2018, the Defendant filed a reply brief. See Docket No. 14. For the reasons set forth below, the Defendant's motion to dismiss the complaint is granted.

         I. BACKGROUND

         Premised on the parties' diversity of citizenship, Shingobee Builders, Inc. (Shingobee) brings a breach-of-contract suit against North Segment Alliance (NSA). See Docket No. 1, pp. 1, 4-7. NSA is a non-profit corporation chartered under tribal law by the Mandan, Hidatsa, and Arikara Nation (MHA Nation), a federally recognized Indian tribe. See Docket No. 10-2, p. 2. Shingobee's contract claims stem from its work on the construction of an apartment complex in New Town, North Dakota, located within the boundaries of the Fort Indian Berthold Reservation. See Docket No. 1, p. 2.

         On July 31, 2015, Shingobee signed a Guaranteed Maximum Price contract with NSA's predecessor in interest[1] to construct a “30 unit apartment building and . . . student housing” known as the Red Hawk Estates Project. See Docket No. 1, p. 2; Docket No. 9, p. 9; Docket No. 10-3, p. 2 (capitalization altered). Under the contract, NSA's predecessor agreed to pay Shingobee for work as the construction manager and general manager of that project. See Docket No. 1, p. 2; Docket No. 10-3, p. 2.

         On March 8, 2017, the Tribal Business Council, the governing body of the MHA Nation, authorized the formation of NSA as a tribal non-profit corporation “under the laws of the Tribe, ” and articles of incorporation were filed that same day. See Docket No. 10-1, p. 2; Docket No. 10-2, p. 2; Docket 10-6, p. 2. On March 9, 2017, the MHA Nation dissolved NSA's predecessor and authorized NSA to “assume[] all assets and liabilities of [the predecessor].” See Docket No. 10-6, p. 3. Shingobee describes that, thereafter, the parties twice amended the contract, each time enlarging the scope of work. See Docket No. 1, pp. 1-3. Shingobee asserts that it has not received payment for work it performed pursuant to the contract amendments. See Docket No. 1, p. 3.

         As the party invoking federal jurisdiction, Shingobee asserts in its complaint that the Court has subject matter jurisdiction because “the action involves citizens of different states and the amount in controversy exceeds $75, 000.” See Docket. No. 1, p. 2. Specifically, Shingobee asserts that it “is a Minnesota corporation” with a principal place of business in Minnesota and that NSA should be “deemed a citizen of North Dakota” because it is a “tribal corporation organized to conduct business on behalf of the Three Affiliated Tribes of the Fort Berthold Reservation [in] North Dakota.” See Docket No. 1, p. 1. Shingobee's complaint makes no reference to any federal law giving rise to any of its claims.

         NSA moves under Rule 12(b)(1) to dismiss this diversity action in its entirety.[2] See Docket No. 8. NSA asserts that the Court lacks jurisdiction because NSA, as a tribal entity, (1) is not a citizen of any state and not subject to diversity jurisdiction and (2) functions as an arm of the Tribe and is protected by sovereign immunity.[3] See Docket No. 9, pp. 12, 15.

         A tribe's immunity from suit and lack of state citizenship are related but independent bars to subject matter jurisdiction. See Hagen v. Sisseton-Wahpeton Cmty. Coll., 205 F.3d 1040, 1043 (8th Cir. 2000) (explaining that tribal sovereign immunity is jurisdictional). There appears, however, to be no mandatory sequence in which to address those issues.[4] See, e.g., Sinochem Int'l Co. v. Malay. Int'l Shipping Corp., 549 U.S. 422, 430-31 (2007); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999). But see Ninigret Dev. Corp. v. Narragansett Indian Wetuomuck Hous. Auth., 207 F.3d 21, 28 (1st Cir. 2000) (holding that subject matter jurisdiction must be addressed prior to tribal sovereign immunity).

         Because the Court lacks subject matter jurisdiction, as detailed below, the Court need not consider whether NSA is immune from or has consented to suit. See Auto-Owners Ins. Co. v. Tribal Court of Spirit Lake Indian Reservation, 495 F.3d 1017, 1020 (8th Cir. 2007) (“Even if an Indian tribe waives its sovereign immunity, such a waiver does not automatically confer jurisdiction on federal courts.”); Weeks Const., Inc. v. Oglala Sioux Hous. Auth., 797 F.2d 668, 671 (8th Cir. 1986) (“Mere consent to be sued, even consent to be sued in a particular court, does not alone confer jurisdiction upon that court to hear a case if that court would not otherwise have jurisdiction over the suit.”).

         II. LEGAL DISCUSSION

         As courts of limited jurisdiction, federal courts possess only the powers authorized by the Constitution and statute, referred to as subject matter jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “[I]t is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.'” Dakota, Minn. & E.R.R. Corp. v. Schieffer, 715 F.3d 712, 712 (8th Cir. 2013) (internal quotation marks omitted) (quoting Kokkonen, 511 U.S. at 377). The party invoking federal jurisdiction must establish subject matter jurisdiction by a preponderance of the evidence. Moss v. United States, 895 F.3d 1091, 1097 (8th Cir. 2018).

         A. STANDARD OF REVIEW

         Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a party to challenge a federal court's subject matter jurisdiction at any time in the proceedings. When moving to dismiss under Rule 12(b)(1), a party “may assert either a ‘facial' or ‘factual' attack on jurisdiction.” Moss, 895 F.3d at 1097. A court must determine whether a 12(b)(1) motion is a facial attack or a factual attack on jurisdiction. Carlsen v. GameStop, Inc., 833 F.3d 903, 908 (8th Cir. 2016) (quoting Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990)). A facial attack on jurisdiction “is based on the complaint alone or on undisputed facts in the record.” Harris v. P.A.M. Transp., Inc., 339 F.3d 635, 637 (8th Cir. 2003).

In a facial attack, the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6).[5] In a factual attack, the court considers matters outside the pleadings, and the non-moving party does not have the benefit of 12(b)(6) safeguards.

Carlsen, 833 F.3d at 908 (footnote added) (citation and internal quotation marks omitted) (quoting Osborn, 918 F.2d at 729 n.6). Considering “matters outside the pleadings when subject matter jurisdiction is challenged under Rule 12(b)(1)” does not “convert the 12(b)(1) motion to one for summary judgment.” Harris, 339 F.3d at 637 n.4 (internal quotation marks omitted) (quoting Osborn, 918 F.2d at 729 n.6).

         NSA's motion to dismiss is a facial attack on jurisdiction because it is based on the complaint and undisputed facts in the record. Shingobee neither challenges any evidence submitted by NSA nor has submitted any evidence of its own. The parties disagree not about the facts but rather the legal import of those facts. See Docket. No. 12, p. 5 (identifying NSA's “citizenship” as “the core of the dispute”). Shingobee agrees that NSA “is a tribal corporation organized to conduct business on behalf of [the MHA Nation]” but disagrees that such a corporation is free from citizenship in the state in which it has its principal place of business. See Docket No. 1, p. 1 (“As such [a corporation], ” NSA should be “deemed a citizen of North Dakota.”); Docket No. 12, p. 4 (“[NSA] appears to rely on an argument that it is an extension of the Tribe, rather than a separate corporation, to support a conclusion that this Court does not have subject matter jurisdiction over this dispute. This is an incorrect interpretation of the law.” (emphasis added)).

         Because NSA's jurisdictional attack is facial, the Court views the complaint in the light most favorable to Shingobee and accepts as true the facts alleged therein. See Hamm v. Groose, 15 F.3d 110, 112 (8th Cir. 1994).

         B. DIVERSITY JURISDICTION

         Under 28 U.S.C. § 1332(a)(1), “[a] federal court has original jurisdiction over a civil action if the parties are of diverse state citizenship and the courts of the state in which the federal court sits can entertain the suit.” Auto-Owners, 495 F.3d at 1020 (internal quotation marks omitted) (quoting Weeks, 797 F.2d at 672). For the parties to be of diverse state citizenship, there must be complete diversity between opposing parties, meaning that no defendant may be a citizen of a state of which a plaintiff also holds citizenship. Junk v. Terminix Intern. Co., 629 F.3d 439, 445 (8th Cir. 2010).

         The particular question of whether a court has diversity jurisdiction over a tribal corporation[6] brings together two divergent legal standards-the standard for determining a corporation's citizenship and the standard for determining a tribe's citizenship. A corporation is “deemed to be a citizen of every State and foreign State by which it has been incorporated and of the State or foreign State where it has its principal place of business.” 28 U.S.C. § 1332(c)(1).

         But a tribe “is not a citizen of any state and cannot sue or be sued in federal court under diversity jurisdiction.” Auto-Owners, 495 F.3d at 1020 (internal quotation marks omitted) (quoting Standing Rock Sioux Indian Tribe v. Dorgan, 505 F.2d 1135, 1140 (8th Cir. 1974)); accordGaming World Int'l v. White Earth Band of Chippewa Indians, 317 F.3d 840, 847 (8th Cir. 2003) (‚ÄúDiversity jurisdiction is not available here under 28 ...


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