Opinion
Civil No. 95-753 (JRT/RLE)
September 25, 2001
Jordan S. Kushner, KUSHNER LAW OFFICE, Minneapolis, MN, for plaintiffs.
Mary Jo Madigan, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Minneapolis, MN, for defendants.
MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION
In this action challenging decisions made pursuant to the White Earth Land Settlement Act, plaintiffs have objected to the Report and Recommendation of United States Magistrate Judge Raymond L. Erickson dated June 5, 2001, recommending that plaintiffs' motion for summary judgment be denied and defendants' motion be granted. The Court has conducted a de novo review of plaintiffs' objections pursuant to 28 U.S.C. § 636(b)(1)(C) and D. Minn. LR 72.1(c)(2). For the reasons set forth below, the Court overrules plaintiffs' objections and adopts the Report and Recommendation of the Magistrate Judge.
BACKGROUND
Plaintiffs seek review of the determination of the defendant Bureau of Indian Affairs, Department of the Interior ("BIA") regarding the amount of compensation due to the heirs of White Earth Reservation allottee Charlotte Wright Dufault Van Wert pursuant to the White Earth Land Settlement Act ("WELSA") codified at 25 U.S.C. § 331. Specifically, plaintiffs challenge the BIA's determination of the fair market value and acreage of Van Wert's allotment and the deduction of compensation allegedly paid to Van Wert in connection with the sale of that allotment. Plaintiffs further argue that procedural irregularities in the administrative process violated plaintiffs' due process rights.
WELSA provides that the BIA shall determine compensation for allottees and their heirs whose allotments were sold during the trust period without approval of the Secretary of Interior before the allottee attained the age of twenty-one. 25 U.S.C. § 331 § 4(a)(2). Compensation must be equal to the fair market value of the land as of the date of transfer, less compensation actually received, plus interest. Id. § 8(a). Compensation actually received is not subtracted where an allotment or interest was sold "by a full or mix blood under the age of eighteen years, or in any instance where there is prima facie evidence that fraud occurred." Id.
Charlotte Van Wert ("Van Wert") was born in 1885. She was enrolled as a member of the White Earth Reservation and her ancestors included Indians and white persons, thus making her "mixed blood" under WELSA. On May 29, 1913, Van Wert conveyed her allotment to Joseph J. Lovin. The execution of the deed was witnessed by her stepfather, Henry LaRoque, and a notary public. According to public records, the compensation paid by Lovin was $575.00.
In accordance with WELSA, the BIA identified Van Wert's heirs and determined that the fair market value of the land, at the date of the sale, was $1,073.39. The BIA then deducted the $575.00 that Van Wert assertedly received from the sale to Lovin, which was evidenced by public records filed on June 19, 1913 in Mahnomen County, some three weeks after the sale.
In 1995, the heirs of Van Wert commenced this lawsuit contending that the BIA should not have deducted the compensation allegedly received by Van Wert from the sale to Lovin and that the BIA was arbitrary in its determination of the acreage, as well as the fair market value per acre of the land. On March 31, 1997 this Court found that further administrative review was necessary on the issue of the fair market value of the allotment and therefore, remanded the case to the BIA to allow plaintiffs to present evidence on this issue. The Court expressly noted, however, that "[t]he issue of whether a deduction should be made is not related to the fair market valuation" but, rather, "is an issue pertaining to the broader topic of the `appropriate amount of compensation computed' pursuant to WELSA, and thus may be judicially reviewed pursuant to WELSA 8(d) without further administrative procedures." Order at 10. Nonetheless, the Court stated that plaintiffs were not prohibited from presenting evidence to the BIA, on remand, relating to the deduction issue, which plaintiffs did. Id.
On December 18, 1997, the BIA issued its Findings and Determination. The BIA upheld its previous determination on the issues of valuation and deduction of compensation. Thereafter, plaintiffs resumed this action, again contending that the BIA acted arbitrarily and without substantial evidence in deciding the acreage and fair market value of the land in question, that the BIA should not have deducted any alleged compensation received at the time of the sale, not only because there is prima facie evidence of fraud, but also that there is insufficient evidence to support the conclusion that Van Wert was eighteen at the time of the sale or that she did, in fact, receive compensation for the land. Plaintiffs further allege that procedural irregularities in the administrative process violated their due process rights.
The Report and Recommendation provides a complete summary of the BIA's decision which the Court will not repeat here.
The parties then filed cross-motions for summary judgment. These motions were referred to the Magistrate Judge pursuant to 28 U.S.C. § 636 and Local Rule 72.1(c). On June 5, 2001, the Magistrate Judge issued his Report and Recommendation, recommending that plaintiffs' motion for summary judgment be denied and that defendants' motion be granted.
ANALYSIS
Plaintiffs raise three main objections to the Magistrate Judge's Report and Recommendation. Specifically, plaintiffs maintain that the Magistrate Judge erred in concluding that: 1) substantial evidence review applies for reviewing the BIA's determination to deduct compensation actually received; 2) the BIA's determination on the compensation deduction issue is supported by substantial evidence; and 3) the BIA did not violate plaintiffs' due process rights. The Court addresses each objection in turn.
I. Standard of Review
Plaintiffs first argue that the issue of whether there should be a deduction for compensation allegedly paid to Van Wert at the time of the sale should be reviewed de novo rather than under the substantial evidence standard. In the Report and Recommendation, the Magistrate Judge correctly cited to 25 U.S.C. § 331(8)(d) of WELSA, which provides that "[t]he Secretary's administrative determination of the appropriate amount of compensation computed pursuant to the provisions of this Act may be judicially reviewed pursuant to the Administrative Procedure Act." After determining that the standard of review is thus controlled by 5 U.S.C. § 706 of the APA, the Magistrate Judge proceeded to address plaintiffs' argument that § 706(2)(F) applies and mandates de novo review.
The Magistrate Judge first noted that, on remand, plaintiffs submitted their evidence concerning the issue of whether the BIA should have deducted compensation actually received, including the subsidiary issues of whether there was prima facie evidence of fraud and whether Van Wert was eighteen at the time of the sale. The BIA considered and reviewed the plaintiffs' evidence and incorporated its conclusions on these issues in its decision. Based on this record, the Magistrate Judge concluded that "this is not one of the rare instances in which the factfinding procedure, which was employed in an adjudicatory proceeding, was inadequate" under 706(2)(F). The Court has reviewed plaintiffs' arguments for de novo review and finds them to be without merit. Accordingly, the Court adopts the Magistrate Judge's determination that substantial evidence review of the compensation issue is appropriate.
II. Compensation Deduction Issue
Plaintiffs next argue that even under substantial evidence review, the BIA's determination regarding whether compensation was actually received is not supported by substantial evidence. Specifically, plaintiffs argue that there is not sufficient evidence to show, by contemporaneously filed federal, state or local documents or by clear and convincing evidence, that compensation was actually received as required under 25 U.S.C. § 331(8)(a), or that Van Wert was eighteen at the time of the sale. Plaintiffs also claim that, contrary to the BIA's determination, they have produced prima facie evidence of fraud surrounding the sale.
The Magistrate Judge thoroughly analyzed each of the above arguments and concluded that the BIA's determination is supported by substantial evidence. In its objections, the plaintiffs reassert the same arguments made before the Magistrate Judge, asking the Court to reach a conclusion different from the Magistrate Judge. Upon de novo review of the record and the arguments of counsel, the Court finds that the Magistrate Judge correctly concluded that the BIA's determinations that the land sale is evidenced by contemporaneously filed documents, that Van Wert was eighteen at the time of the sale and that plaintiffs have not produced prima facie evidence of fraud is supported by substantial evidence.
III. Due Process Violation
Plaintiffs' final objection is that BIA procedural irregularities deprived plaintiffs of their due process rights. Specifically, plaintiffs take issue with the Magistrate Judge's determination that they were not materially prejudiced by the BIA's failure to consider plaintiffs' administrative appeal. In his Report and Recommendation, the Magistrate Judge determined that although the language of the Notice of Appeal is somewhat confusing, thus explaining plaintiffs' failure to file their appeal with the appropriate office, plaintiffs were not materially prejudiced when the BIA refused to hear their administrative appeal. The Magistrate Judge emphasized that plaintiffs were permitted to present evidence to the BIA on remand that they deemed warranted, and they were afforded the right to challenge the agency's decision in this Court after remand notwithstanding the absence of a timely appeal. The Magistrate Judge further found that in the absence of some particularized showing that certain evidence was excluded from the BIA's attention because no appeal was allowed and given the BIA's affirmance of its original decision on remand, plaintiffs did not offer any showing which would cause the BIA to alter its final ruling.
By order dated March 29, 2000 the Court rejected defendants' argument that plaintiffs' request for judicial review was untimely.
Although plaintiffs again argue in their objections that they were materially prejudiced by the BIA's failure to hear their appeal, the Court agrees with the Magistrate Judge that plaintiffs have not made a sufficient showing on this issue. Plaintiffs merely speculate that the BIA, on appeal, could have rejected the administrative decision, conducted further factfinding, and/or conducted a more formal hearing process. On this record, the Court is satisfied for the same reasons found by the Magistrate Judge that reversal of the BIA's determination on procedural due process grounds is not warranted.
Thus, for all the foregoing reasons, the Court adopts the Report and Recommendation of the Magistrate Judge.
ORDER
Based on the foregoing, the submissions of the parties, and all of the files, records, and proceedings herein, the Court OVERRULES plaintiffs' objections [Docket No. 69] and ADOPTS the Report and Recommendation of the Magistrate Judge [Docket No. 68]. Accordingly, IT IS HEREBY ORDERED that:
1. Plaintiffs' motion for summary judgment [Docket No. 57] is DENIED;
2. Defendants' motion for summary judgment [Docket No. 60] is GRANTED.