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Ninth Circuit Says HUD Breached No Actionable Trust Duty Concerning Blackfeet Housing March 27, 2008

Posted by rezjudicata in 9th Circuit, Federal Circuits.
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Marceau v. Blackfeet Housing Authority, No. 04-35210, (9th Cir. March 19, 2008)

Issue(s): Tribal Immunity > Waiver; Federal Courts > Comity >> Tribal Court Exhaustion; Trust Relationship > Causes of Action >> Mitchell Doctrine; Administrative Law > APA Claims >> Required Agency Actions

In 1977, the Blackfeet Tribe created the Blackfeet Housing Authority to take advantage of HUD block grants. Adopting HUD-authored regulations and using HUD money, the Authority built 153 homes. According to Marceau, HUD directed the Authority to use chemical-laden wooden foundations for the home. As a result, many of the homes’ inhabitants became seriously ill and many of the homes became uninhabitable. Did the Authority enjoy immunity from suit as a tribal entity? If not, did the plaintiff’s need to exhaust their tribal court remedies? Did plaintiffs have a cause of action against HUD for violating a trust responsibility? And could plaintiffs state a claim against HUD based on the APA?

On rehearing, the Ninth Circuit held that the Authority had no immunity; no exhaustion was necessary; HUD undertook no trust responsibility; but the plaintiffs could assert an APA claim.

The Authority argued that the Court should dismiss the claims against it, or at least require the plaintiffs to exhaust tribal remedies. Tribes generally enjoy immunity from suit unless the tribe waives its immunity. The Court held that the Tribe waived the Authority’s immunity in a “sue and be sued” clause in the Authority’s enabling statute. Furthermore, exhaustion was not required because the Blackfeet Tribal Court of Appeals had already ruled on the immunity issue. The Blackfeet Court also ruled that the Authority possessed no immunity. Because the Blackfeet Court is the Tribe’s court of last resort, the Authority had already exhausted tribal remedies. More importantly, the Blackfeet Court interpreted tribal law and that interpretation is binding on federal courts. Thus, the plaintiffs’ suit against the Authority could proceed.

Plaintiffs also argued that HUD breached its trust responsibility. The Court said that a general trust relationship exists between the government and tribal members. This relationship, however, does not always translate into a cause of action. Citing the Mitchell Doctrine, the Court explained that an action arises only where a statute gives grants the government pervasive control over the asset at issue. In other words, a statute or regulation must specifically create rights for Indians or impose a duty on the government. Rather than impose a duty, the relevant statute here vested the maximum amount of responsibility in the local housing authority. Indeed, the Court found that by advancing self-determination, the statute simultaneously eliminated action-creating governmental duties. Additionally, HUD restrictions that did apply, applied generally and not to Indian housing authorities alone; no HUD regulation required the use of chemically treated wood; and Indian housing authorities did not have to rigidly adhere to the minimum HUD standards. Absent pervasive control, no actionable breach of fiduciary duty could have arisen.

Plaintiffs, however, also alleged that HUD approved the use of wood foundations and required construction techniques that violated HUD’s own regulations. Under the APA, a party may sue a federal agency for harmful actions taken by the agency. The Court held that the district court prematurely dismissed the plaintiffs’ APA claim. The record contained no information on whether the construction violated industry standards or whether the plaintiffs requested HUD to use other materials. At the lease, the plaintiffs adequately had stated and APA claim that deserved factual development.

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