Opinion
A139147
09-28-2017
KATHRINE ROSAS, Plaintiff and Appellant, v. AMG SERVICES, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. JCCP004688)
This is an appeal from an order by the trial court granting a motion to quash service of summons for lack of jurisdiction and to dismiss by specially appearing defendant and respondent AMG Services, Inc. (hereinafter, AMG). Plaintiff Kathrine Rosas brought this lawsuit, as both private attorney general and on behalf of herself and all other similarly situated persons, against numerous defendants, including individuals Scott Tucker and Blaine Tucker and several corporate and tribal entities associated with them, based upon their purported involvement in an illegal internet payday loan operation. Relevant to this appeal, the trial court found AMG, a wholly-owned subsidiary of former defendant Miami Tribe of Oklahoma, a federally recognized Indian tribe, immune from suit pursuant to the doctrine of tribal sovereign immunity. On this basis, the trial court then granted AMG's motion to quash and dismissed the action as to it.
More detailed statements of the procedural and factual background of these proceedings may be found in two companion cases filed concurrently with this opinion - Baillie v. Processing Solutions, LLC, A144105, and Baillie v. Tucker, A141201.
The trial court order challenged on appeal in fact dismissed five entities from Rosas's lawsuit: AMG; Miami Tribe of Oklahoma; Santee Sioux Nation; SFS, Inc., doing business as Preferred Cash Loans and One Click Cash; and Miami Nation Enterprises (hereinafter, MNE), doing business as Ameriloan, United Cash Loans and USFASTCASH. Of these five entities, only AMG is named as a respondent in this appeal.
Other named defendants not subject to this appeal are the socalled "Scott Tucker Corporations" (to wit, defendants, AMG Capital Management, LLC, Black Creek Capital Corporation, Black Creek Capital LLC, Broadmoor Capital Partners, LLC, Leadflash Consulting LLC, Level 5 Motorsports, N.M. Service Corp., Park 269 LLC, St. Capital LLC); the Muir Law Firm LLC, and individual defendants Scott Tucker, Blaine Tucker (now deceased), Don Brady, Robert D. Campbell, Timothy J. Muir, and Kim Tucker. The trial court's order to dismiss the Tucker defendants from this lawsuit is subject to the separate appeal before this court, Baillie v. Tucker, A141201.
After briefing concluded in this appeal of the trial court's order, the California Supreme Court decided People v. Miami Nation Enterprises (2016) 2 Cal.5th 222 (MNE), a separate but related case in which the Commissioner of the Department of Corporations sued Miami Tribe of Oklahoma and Santee Sioux Nation (former defendants in this action), as well as several associated tribal business entities, for essentially the same illegal lending practices alleged herein. After granting the Commissioner's petition for review, the California Supreme Court reversed the appellate court's decision to affirm an order, like ours, granting the defendants' motion to quash and dismiss for lack of jurisdiction on grounds of tribal sovereign immunity. In doing so, the high court, inter alia, adopted a new test for determining whether tribally affiliated entities are immune from suit as "arm[s] of the tribe," before ultimately holding that, on the record before it, the defendants had not shown by a preponderance of the evidence they were entitled to tribal sovereign immunity. (MNE, supra, 2 Cal.5th at pp. 245-248, 252-256.) Accordingly, the high court reversed the order and remanded the matter for further proceedings. (Id. at p. 256.)
In MNE, the Commissioner of the Department of Corporations sued many of the same tribal entities named in our lawsuit, alleging violations of the California Deferred Deposit Transaction Law that included making deferred deposit loans without a license, issuing loans in excess of the $300 statutory maximum, charging borrowers unlawful fees, and violating the Commissioner's desist and refrain orders. (2 Cal.5th at pp. 230-231.)
In its opinion, the California Supreme Court aptly described the relationship among the defendants as follows: "The Miami Tribe of Oklahoma is a federally recognized tribe. (79 Fed.Reg. 4748, 4750 (Jan. 29, 2014).) In 2005, it created Miami Nation Enterprises (hereafter MNE), as a 'subordinate economic enterprise of the Miami Tribe of Oklahoma.' In 2008, MNE created MNE Services, a wholly owned subsidiary of MNE that is incorporated under tribal law. Shortly thereafter, MNE transferred Tribal Financial Services (TFS), its 'financial lending' subdivision, to MNE Services. MNE Services holds tribal licenses to engage in the 'cash advance service business' under the names Ameriloan, United Cash Loans, and U.S. Fast Cash." (MNE, supra, 2 Cal.5th at p. 230.)
"The Santee Sioux Nation, located in northeastern Nebraska, is also a federally recognized tribe. (79 Fed.Reg. 4748, 4751 (Jan. 29, 2014).) In 2005, the tribe passed a resolution creating SFS, Inc. (hereafter SFS), 'an economic and political subdivision of the Santee Sioux Nation.' According to its articles of incorporation, SFS 'is organized . . . to facilitate the achievement of goals relating to the Tribal economy, selfgovernment, and sovereign status of the Santee Sioux Nation' by 'provid[ing] and/or administer[ing] shortterm loans and cash advance services ("payday loans") and associated services.' The tribe has issued licenses to SFS to 'conduct a cash advance and lending business' under the names Preferred Cash and One Click Cash. These lenders provide 'cash advance services, or shortterm loans, to eligible borrowers . . . and the loan transactions are approved and consummated on Indian lands and within the jurisdiction of the Santee Sioux Nation." (MNE, supra, 2 Cal.5th at p. 230.)
In MNE, it was undisputed that defendants Miami Tribe of Oklahoma and Santee Sioux Nation, to wit, federally recognized tribes, were themselves immune from suit. (MNE, supra, 2 Cal.5th at pp. 235-236.)
We asked the parties in this case to submit supplemental briefing on the question of whether we should remand in light of the MNE decision. In this supplemental briefing, the parties agreed the trial court's ruling on defendants' motion to quash must be reconsidered in light of the high court's new authority. However, they disagreed on the appropriate course of action for this reconsideration.
On the one hand, Rosas argues we should apply MNE's new standard in the first instance and reverse in favor of a new order denying AMG's jurisdictional challenge. Rosas reasons the California Supreme Court in MNE adopted several new rules applicable to our case, including a new burden-shifting rule requiring the party asserting tribal immunity (here, AMG) to prove it is an "arm of the tribe" based upon a new five-factor test. Rosas insists MNE requires a ruling by this court that AMG has not met its burden of proving it is an arm of the tribe given that, in MNE, the high court held based on a nearly-identical record that defendant MNE was not entitled to tribal immunity in that case. As Rosas points out, "AMG has repeatedly stated, MNE and AMG are sister entities with similar organizational structures . . . ."
The California Supreme Court's new standard for determining when a tribal entity is entitled to tribal sovereign immunity is based upon the following individually nondispositive factors: (1) method of creation, (2) tribal intent, (3) purpose, (4) control, and (5) financial relationship. (MNE, supra, 2 Cal.5th at p. 236.) This new standard represents a modified version of the standard set forth in Breakthrough Management Group, Inc. v. Chukchansi Gold Casino and Resort (10 Cir. 2010) 629 F.3d 1173 (Breakthrough). (MNE, supra, 2 Cal.5th at p. 238, 244.) According to the high court, "[these factors] properly account for the understanding that tribal immunity is both 'an inherent part of the concept of sovereignty' and ' "necessary to promote the federal policies of tribal self-determination, economic development, and cultural autonomy." ' [Citation.]" (Id. at p. 244.)
AMG, in turn, argues we should remand this matter to the trial court in light of MNE for two reasons, first, to decide whether MNE has retroactive effect in this case and, second, if it does, to permit AMG the opportunity to marshal further evidence to meet its new burden under MNE's five-factor tribal immunity test. With respect to retroactivity, AMG acknowledges the general rule that California Supreme Court cases are applied retroactively to pending cases; nonetheless, it insists this case is exceptional in that the new MNE decision "changes a settled rule on which the parties have relied," citing Brennan v. Tremco, Inc. (2001) 25 Cal.4th 310, 318. In the alternative, AMG argues that, because MNE adopted both a new burden-shifting rule and five-factor test for applying the doctrine of tribal sovereign immunity, it should have the opportunity on remand to pursue further discovery in order to meet the new standard prior to a new trial court ruling.
Having considered the parties' respective positions, we conclude the appropriate course of action is to remand to the trial court so that it, rather than this court, may apply the new standard to the facts at hand in the first instance. In doing so, we reject AMG's claim that MNE lacks retroactive import in this case. "As a general rule, judicial decisions are given retroactive effect, even if they represent a clear change in the law. (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978-970 [258 Cal.Rptr. 592, 772 P.2d 1059].) The exception is when considerations of fairness and public policy are so compelling in a particular case that, on balance, they outweigh the considerations that underlie the basic rule. (Id. at p. 983.) This exception applies in particular when a party justifiably has relied on the former rule. (Ibid.; [citations].)" (Bearden v. U.S. Borax, Inc. (2006) 138 Cal.App.4th 429, 442-443. See also Woods v. Young (1991) 53 Cal.3d 315, 330 ["Particular considerations relevant to the retroactivity determination include the reasonableness of the parties' reliance on the former rule, the nature of the change as substantive or procedural, retroactivity's effect on the administration of justice, and the purposes to be served by the new rule. [Citations.]"].) In this case, considerations of fairness and public policy - including the policy of deciding cases on their merits - so clearly weigh in favor of retroactivity that we do not hesitate to remand this matter to the trial court to apply MNE in the first instance.
At the same time, we do agree AMG is entitled to an opportunity to further develop the evidentiary record in light of its newly-announced burden under MNE to prove by a preponderance of the evidence that it is an "arm of the tribe" entitled to tribal immunity. (MNE, supra, 5 Cal.5th at p. 236.) Accordingly, the trial court's order granting AMG's motion to quash and dismiss for lack of jurisdiction is reversed and the matter remanded for further proceedings consistent with the opinions raised herein.
Plaintiff's request for judicial notice, filed August 29, 2017, is denied as irrelevant given our decision to remand this matter to the trial court for further consideration. --------
DISPOSITION
The May 6, 2013 order granting respondent AMG's motion to quash and to dismiss for lack of subject matter jurisdiction is reversed, and the matter remanded for further proceedings in light of the California Supreme Court decision in People v. Miami Nation Enterprises, supra, 2 Cal.5th 222, as well as the opinions discussed herein. / / / / / / / / /
/s/_________
Jenkins, J. We concur: /s/_________
Pollak, Acting P. J. /s/_________
Siggins, J.