Fredericks Peebles & Morgan LLP
ads@blueearthmarketing.com   712.224.5420

Business Deals | Litigation | NIGC
Native Sun News: Rosebud Sioux gaming suit keeps on turning


The following story was written and reported by Jesse Abernathy, Native Sun News Editor. All content © Native Sun News.


Charles Colombe

Dana Hanna

RAPID CITY, SOUTH DAKOTA –– An 11-year-old legal case that originated on the Rosebud Reservation and revolves around the Rosebud Casino’s former managing entity continues on its convoluted, diehard course.

Charles Colombe, a former director and officer of and shareholder in Boyd, Boyd & Colombe (BBC) Entertainment Inc., which managed the Rosebud Sioux Tribe’s casino from 1994 to 1999, says the tribe owes him money for attorneys’ fees and court costs stemming from the longstanding legal battle.

The tribe, however, via its former attorney general, Dana Hanna of Rapid City, says Colombe owes half a million dollars for breach of contract, with a portion of that amount having built up over the lifetime of the almost dozen-year dispute.

In a pre-interview email to Native Sun News, Hanna, who is the tribe’s current legal representative but is no longer actively litigating the ongoing BBC case, said he was directed by tribal President Rodney Bordeaux to contact NSN in response to a recent article about Colombe’s legal plight involving BBC’s one-time management of the Rosebud Casino, which the tribe now runs.

As delineated in court documents, the RST initially filed a civil suit against BBC in 2001, claiming Colombe overpaid the company by almost $400,000 when the management contract ran out in 1999.

According to the original agreement between Colombe, who is now legally considered the sole shareholder of BBC, and the tribe, BBC would be paid 35 percent of the casino’s profits; the tribe would receive the remaining 65 percent.

Initially, a tribal judge sided with BBC. The tribe appealed the ruling to the RST Supreme Court, which granted a new trial and appointed a special judge, B.J. Jones, who presides over Sisseton Wahpeton’s tribal court, to hear the case.

In October 2007, a judgment by Jones in the amount of $527,000, inclusive of interest, was entered against BBC in Rosebud’s tribal court. The tribal court subsequently denied BBC’s request for a new trial.

Hanna said BBC had 30 days to file a notice of appeal to the tribal Supreme Court after the December 2007 denial, but did not.

That means BBC can’t appeal to the federal court system because the federal Indian Gaming Regulatory Act and the management contract say the company first must exhaust all tribal court remedies, according to Hanna. And “Colombe did not exhaust all tribal court remedies,” he said.

The RST is still in the process of trying to recover the money, while Colombe is still in the process of trying to appeal in federal court on the grounds that both the tribe and the tribal court violated the RST’s constitution in the matter, as well as on the grounds that BBC lacked the financial security to file a required appeal bond in tribal court at the end of 2007.

“I’ve been informed that the Rosebud Sioux tribal special judge, the court, entered a summary judgment in favor of the tribe in the tribal court case against Colombe – I think this took place (on February 23),” said Hanna. “Now I’m 99 percent sure of these facts, but I have to say I haven’t read the judgment. The reason I say I’m confident about this is because the lawyer who represented the tribe in the action in the tribal court – an action to pierce the corporate veil – is Steve Sandven from Sioux Falls.”

Attorney Patricia Meyers of Rapid City was appointed special judge by the RST in the most recent proceeding.

Hanna said Sandven sent Bordeaux an email on or around March 14 advising him that the special judge entered an order granting summary judgment to the tribe. According to Hanna, the tribe filed an action in tribal court to pierce the corporate veil approximately three years ago.

“What that means is, if you and I are shareholders in a corporation and there’s a judgment against the corporation, (the plaintiff) can’t go after your bank account or my bank account,” he said. “That’s the reason why people have corporations, to protect the individual shareholders. But, there’s such a thing as an action to pierce the corporate veil, which basically means going after the assets of the shareholders or shareholder.” In essence, said Hanna, it means there’s no difference between the corporation and the individual.

“Now in this particular case, Colombe is the only owner – the sole owner and shareholder – of BBC, according to his own testimony,” he said.

Having the tribe’s motion to pierce the corporate veil granted blurs the legal differentiation between BBC as a corporation and Colombe as an individual owner of BBC, Hanna indicated.

Additionally, the tribe sought the motion because BBC currently has zero assets, Hanna said. “That’s what the latest federal case is about.”

In January of last year, Colombe filed a complaint against the tribe, tribal court and tribal Chief Judge Sherman Marshall in U.S. District Court, Pierre, seeking an injunction to prohibit the entities from continuing litigation against him in the matter of the October 2007 judgment.

The tribal parties responded with a motion to dismiss Colombe’s most recent complaint. Hanna said one of his first assignments in 2003 as the tribe’s former attorney general was BBC’s case.

“The long and the short of the matter is, (the tribe) believes Colombe, in the last days of BBC, wrote two checks to BBC without consulting the tribe for over $300, 000 that belonged to the tribe,” he said. “The tribe had filed that lawsuit before I became attorney general, but not much was happening with it. So they had me, as attorney general, and a lawyer from Washington, D.C., by the name of Judith Shapiro, try the case in tribal court – and the first time around, we lost.”

The court entered judgment in favor of BBC, said Hanna, ruling that the tribe had agreed to amend the gaming contract, the casino contract, with Colombe.

“Our position was … the tribe didn’t agree on that; there wasn’t any such agreement – Colombe just helped himself to the money without any legal right to it.”

According to Hanna, there was a dispute going on between Colombe and the tribal council in the last days of BBC’s contract with the Rosebud Casino, in August 1999, because the council wanted to end BBC’s management of the casino.

“Colombe very much wanted to stay on as manager. In fact, he offered to stay on for half the pay he was getting … but (the council) didn’t want him anymore. It was a very bitter kind of battle,” he said.

“And, literally, in the last days of that contract – like the last three days – Colombe just wrote two checks to BBC, and the tribe has been chasing that money ever since.”

Hanna said the original ruling by the tribal court was then appealed to the RST’s Supreme Court, which reversed the lower court’s decision on the basis that the tribal court judge made a legal error in finding that an agreement between the tribe and BBC to amend the original contract existed. According to the tribal Supreme Court, no such agreement existed.

“Even if there was an agreement to amend the management contract, it was illegal” because it was not approved by the National Indian Gaming Commission, said Hanna. “So we tried the case again (in 2007), and we won.”

Hanna noted that “six months after I became attorney general for the tribe in 2003, Colombe runs for tribal president and wins, so the tribe is basically suing its president’s company, and the president is the supervisor of the attorney general – you can imagine the political conflux.”

As soon as Colombe won the election, Hanna immediately submitted his resignation as tribal attorney general. “This is an absolute conflict of interest. I cannot be supervised by the guy I’m suing.”

However, the tribal council wanted Hanna to stay on as attorney general, and passed a resolution that allowed him to be supervised by the vice president rather than the president.

“And I spent the next two years fighting political battles with Colombe,” said Hanna. “Colombe is now asking the federal court to vacate the order against BBC. But he has yet to exhaust all tribal court remedies.”

Before a reservation-based civil case such as Colombe’s can be presented in federal court, all tribal court avenues must be attempted – this is a key principle in Indian law, according to Hanna. This includes the appeals process, which “Colombe didn’t do. He simply chose not to. That was the main thrust of why we thought the case should be dismissed,” he said.

Last August, U.S. District Court Judge Roberto A. Lange, out of Pierre, entered an order that basically dismissed almost all of Colombe’s lawsuit, Hanna said. Lange “basically said the case can continue; he didn’t rule on the merits – who’s right and who’s wrong – in terms of the contract. He’s ruling on whether or not the court can even hear the case.

Lange ruled that Colombe can’t appeal because he failed to exhaust the tribal court system on all but one issue – whether or not the tribal court can even hear the aspect about the management contract requiring pre-binding approval from the National Indian Gaming Commission, a federal regulatory agency, according to Hanna.

“Our position is, of course tribal courts can consider federal law, just like state courts can – they have to. But that’s the last thing that’s pending in the case,” said Hanna. “Also, Colombe recently filed a claim in federal court seeking final judgment, saying that everything’s been decided. And that’s because he needs a final judgment before he can make an appeal.”

However, “everything has not been decided,” Hanna said, “there’s still the matter of tribal jurisdiction in making a decision regarding a federal statue” that Lange must review. Colombe’s case in federal court “is a ship that is dead in the water and just has not sunk yet,” he said.

In responding to Hanna’s comments about his case, Colombe pointed out that Hanna had written a letter to the RST’s Supreme Court, outlining BBC’s legal requirement under the high court’s procedural rules to either post an appellant bond equal to the half-a-million-dollar judgment against BBC or, in the absence of such bond, file a statement of financial responsibility with the court prior to submitting an appeal.

Hanna advised the tribal Supreme Court “not to accept an appeal from (BBC) without the bond,” said Colombe. “Well, obviously we didn’t have $500,000 after many years of battling over (the management contract).”

In Hanna’s Oct. 31, 2007 letter, he went on to state that “BBC should not be allowed to file a notice of appeal unless they file a statement of financial responsibility, cash or asureties equal to the amount of judgment in Tribal Court. If BBC Entertainment cannot file a statement of financial responsibility which shows they are capable of satisfying the judgment, the Rules of Procedure do not permit the Defendant to file a notice of appeal.”

Hanna wrote an earlier letter to the RST’s judicial system “on the day that the tribe could’ve appealed the original ruling in BBC’s favor and added (BBC) in as individuals when they sued (us), and they got everything they asked for – even though it was a misguided judgment,” Colombe said. “(Hanna) said in that letter, that neither (Wayne) Boyd nor Colombe were personally responsible for the debt, it was a BBC debt.”

If Hanna had written these letters in court cases that took place off the reservation, such actions would be considered interference, Colombe said.

“I certainly am not going to call Mr. Hanna a liar, but those letters prove that he hasn’t told everything about the case,” Colombe said.

Colombe noted that the tribe’s case against BBC has no merit.

According to Colombe, the Rosebud Casino underwent three audits during 1999, the final year BBC managed it. The tribe selected JOSEPH EVE, a regional accounting firm headquartered in Montana, to conduct the audits.

“Each of those audits, in the balance sheet portion, showed that BBC was owed about $13,000 at the end of our contract," Colombe said. "And again, we only took what money we had coming to us, or it would have been a criminal matter – the National Indian Gaming Commission would have arrested us.”

If the tribe was justified in filing the initial lawsuit against BBC, it would have wanted BBC’s 35 percent stake of the casino’s profits to be less, said Colombe, and that’s exactly what happened.

“The contract was down to 31 percent. Frankly, the tribe doesn’t understand accrual versus cash accounting," Colombe said. "And I’ve got to give Mr. Hanna credit for arguing a case that he had absolutely no right to win.”

According to investopedia.com, under the accrual accounting method, revenue and expenses are recorded when they are incurred. By contrast, under the cash accounting method, receipts are recorded during the period they are received, and expenses in the period in which they are actually paid.

“Mr. Hanna’s judgment is based purely on cash accounting, and the contract was always done on accrual accounting and all the (casino) audits were done on accrual accounting," Colombe said. "And the audits, each time, showed a balance owing to BBC. We never, ever got over 35 percent.”

Colombe contends that Hanna never bothered to read the management contract between BBC and the tribe, he “merely sued BBC for what the tribe asked for.” Audits of Native American casinos as well as accrual accounting systems are required under Indian Gaming Regulatory Act provisions, Colombe added.

“And the National Indian Gaming Commission subpoenaed (BBC’s) books through the end of the contract," Colombe said. "They looked at every single thing that we did, gave us a clean bill of health and went back to Washington, D.C.”

Colombe said the tribe is holding him personally responsible for the adjudged amount because BBC has no money.

“The whole case is based on the tribe’s premise that BBC took something from the tribe that it did not have coming. I look at it as political punishment for doing good in reservation business,” Colombe stated.

Tribal court lacks credibility, according to Colombe. But, under the law, “you must exhaust all tribal court remedies … which is hard to do when tribes aren’t willing to give up their sovereign immunity to be sued,” he said.

“This has easily been the most phenomenal business case that I’ve seen, frankly, on any reservation between the reservation and one of its members," Colombe asserted. "We hear about tribal courts, and when you’re continuously in the top 5 poorest counties in the United States, there’s obviously something that precludes business development on reservations – it’s plain and clear that non-Indians have stayed away.”

Colombe said BBC will be appealing the judgment in favor of the tribe to the 8th U.S. Circuit Court of Appeals.

“We think we have exhausted all tribal court remedies as we do not have the wherewithal to file an appeal in tribal court," Colombe said. "There’s a special provision in Rosebud tribal law – that I drafted together with the tribal council as president – that says that any dispute with tribal government, either side can appeal the case in the federal court, and it starts over fresh.”

All BBC wants is to end the legal persecution by the tribe and to resolve the matter in a real court, said Colombe. Additionally, Colombe alleges the tribe misappropriates federal funding intended for its courts and has failed to implement a tribal court system that is separate from the rule of tribal council, disregarding one of its own constitutional amendments.

“Before the first judgment against BBC, the people had already enacted an amendment that said the tribe must have an independent court system, and the tribe ignored the amendment," Colombe said.

(Contact Jesse Abernathy at editor@nsweekly.com)

Related Stories:
Native Sun News: Former Rosebud leader seeks day in court (3/2)