Sound Dev. v. Sherstone, Inc.

The court has heretofore entered an order remanding this case to the Superior Court for the State of Alaska.[1] So far as the court is aware, the removal of this case from state court and the motion to remand present an issue of first impression under the 1988 amendments[2] to the Alaska Native Claims Settlement Act (herein the Settlement Act or ANCSA), 43 U.S.C. § 1601, et seq.

In 1980, for the purpose of enhancing the quantity and quality of renewable resources and to facilitate land management in Alaska with respect to federal, state, and Native lands, Congress created the Alaska Land Bank Program. 43 U.S.C. § 1636. On specified terms and conditions, private property, such as that owned by Settlement Act corporations, might be made subject to the program; and, if they were, certain benefits flowed to the private land-owners, amongst which was immunity from judgments. 43 U.S.C. § 1636(c)(2)(C) (1980). In 1988, Congress revisited the benefits portion of the Alaska Land Bank Program, enacting a new subsection 1636(d), which provided in pertinent part:

(1) (A) Notwithstanding any other provision of law or doctrine of equity, all land and interests in land in Alaska conveyed by the Federal Government pursuant to the Alaska Native Claims Settlement Act [43 U.S.C.A. § 1601 et seq.] to a Native individual or Native Corporation or subsequently reconveyed by a Native Corporation pursuant to section 39 of that Act [43 U.S.C.A. § 1629e] to a Settlement Trust shall be exempt, so long as such land and interests are not developed or leased or sold to third parties from–
(i) adverse possession and similar claims based upon estoppel;
(ii) real property taxes by any governmental entity;
(iii) judgments resulting from a claim based upon or arising under–
          (I) Title 11 or any successor statute,
          (II) other insolvency or moratorium laws, or
          (III) other laws generally affecting creditors’ rights;
(iv) judgments in any action at law or in equity to recover sums owed or penalties incurred by a Native Corporation or Settlement Trust or any employee, officer, director, or shareholder of such corporation or trust, unless this exemption is contractually waived prior to the commencement of such action; and
(v) involuntary distributions or conveyances related to the involuntary dissolution of a Native Corporation or Settlement Trust.

Subsection 1636(d) contains a number of definitions which are important to this case,[3] but not to the resolution of the issue of this court’s jurisdiction. However, and pertinent to this court’s jurisdiction, subsection 1636(g) provides:

Except as expressly provided in subsection (d) of this section, no provision of this section shall be construed as affecting the civil or criminal jurisdiction of the State of Alaska.

Finally, it should be noted that the 1988 amendments to ANCSA added the following term to the several provisions already in the Settlement Act having to do with litigation:

No provision of this chapter shall be construed to constitute a jurisdictional act, to confer jurisdiction to sue, nor to grant implied consent to Natives to sue the United States or any officers with respect to the claims extinguished by the operation of this chapter. . . .”

43 U.S.C. § 1601(f).

At least for purposes of the remand motion, it is undisputed that the defendants own or have an interest in lands which are subject to the Alaska Land Bank Program. Plaintiff and the defendants entered into a memorandum of understanding regarding the harvest of Sherstone-owned timber from Eyak lands.[4] The memorandum of understanding also obligated plaintiff to construct and defendant Sherstone to pay for the construction of roads necessary to access merchantable timber sufficient to meet the logging production obligations taken on by plaintiff. This memorandum of understanding came to an end under circumstances which resulted in plaintiff filing a complaint in superior court. In the complaint, plaintiff asserts a fifth cause of action for lien foreclosure pursuant to AS 34.35. This cause of action contains no overt reference to any applicable federal law.

Relying upon Ultramar America Ltd. v. Dwelle, 900 F.2d 1412, 1414 (9th Cir. 1990), plaintiff contends that its case was not subject to removal because state law created the cause of action upon which removal was predicated, and that no disputed question of federal law is a necessary element to a well-pleaded claim for lien foreclosure. In opposing the motion, defendants in substance contend that Congress has completely preempted the field of creditor litigation over Settlement Act lands, relying chiefly upon principles set out in Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 39 L. Ed. 2d 73, 94 S. Ct. 772 (1974).

It is too clear to require any extended discussion that plaintiff’s lien foreclosure cause of action constitutes a well-pleaded claim which has no federal component. As a consequence, this court has federal question jurisdiction of plaintiff’s claim under 28 U.S.C. § 1331 only if, as defendants contend to be the case, Congress has preempted the state law lien foreclosure cause of action. Such preemption could flow from one or the other of two aspects of this case.

Even though Oneida, upon which defendants rely, is not a removal case, it nonetheless involves the well-pleaded complaint doctrine and the question of whether the Oneidas’ cause of action was one under state law or federal law. The Supreme Court concluded that the Oneida case was one under federal law because it involved the occupancy of Native lands, a subject within the “exclusive province of federal law.” Oneida, 414 U.S. at 670.

Oneida, and the preemption rule which one can develop from it, is inapposite in this case. We do not deal here with the aboriginal title of Alaska Natives. Aboriginal title was expressly “extinguished” by ANCSA. 43 U.S.C. § 1603(b). In extinguishing aboriginal title to Alaska Native lands, Congress expressly found that:

The settlement should be accomplished rapidly . . . without establishing any permanent racially defined institutions, rights, privileges, or obligations, without creating a reservation system or lengthy wardship or trusteeship, and without adding to the categories of property and institutions enjoying special tax privileges or to the legislation establishing special relationships between the United States Government and the State of Alaska.

13 U.S.C. § 1601(b)

While, as discussed below, Congress has apparently retreated somewhat from the foregoing, the foregoing renders clear any uncertainty as to certain aspects of the status of Settlement Act lands. The lands in question are not reservation lands. They are not held in trust by the federal government for Alaska Natives. It is thus that the instant case is demonstrably different from Oneida.

Defendants’ second argument is equally unavailing.[5] Defendants read 43 U.S.C. § 1636(d) to effect complete preemption of a state law lien foreclosure action as to Settlement Act lands. To the court, the plain language of section 1636 says otherwise.

In other situations, such as the Labor-Management Relations Act, 29 U.S.C. §§ 141-197, § 185 and § 187, and the Employees Retirement Income Security Act, 29 U.S.C. §§ 1001 -1461, § 1132, Congress has expressly created a federal cause of action, thereby preempting state law causes of action on the same subject. Under ANCSA, however, Congress has taken precisely the opposite approach. By 43 U.S.C. § 1601, Congress has expressly negated any suggestion that the Settlement Act “constitute a jurisdictional act.”

In adopting the 1988 amendments to ANCSA, Congress was again attentive to the question of jurisdiction, providing, as quoted at length above, that subsection 1636(d) should not “be construed as affecting the civil or criminal jurisdiction of the State of Alaska.”[6] That caveat is totally at odds with defendants’ argument that any state lien foreclosure action as to Settlement Act lands is preempted or has a federal element which the plaintiff must prove, and that such action is therefore removable under 28 U.S.C. § 1331.

Finally, even the plain language of subsection 1636(d)(1)(A) fails to evince any clear intent on the Part of Congress to create a federal cause of action or otherwise foreclose any state law lien foreclosure action against Settlement Act lands.

Firstly, by necessary implication, Settlement Act lands which are “developed” are not subject to subsection 1636(d). Rather subsection 1636(d) expressly applies to Settlement Act lands which are not developed or leased or sold to third parties” (emphasis supplied). Especially in light of subsection 1636(g), the foregoing language clearly implies that Congress meant to leave state lien foreclosure actions as to developed property in status quo.

Secondly, subsection 1636(d) makes an interesting distinction between claims of adverse possession, taxes, and claims such as are the subject of this action–those based on creditors’ rights. As to adverse possession, subsection 1636(d)(1)(A)(i) would appear (although the court does not so rule) to preempt or bar even the assertion of such a claim as to undeveloped land. Similarly, subsection 1636(d)(1)(A)(ii) exempts undeveloped Settlement Act lands from real property taxes. Again, such governmental claims appear to be totally barred.

By way of contrast, undeveloped Settlement Act lands are not similarly exempted from claims based upon creditors’ rights laws. Rather, such lands are exempted only from a judgment resulting from a creditor’s claim. Subsection 1636(d)(1)(A)(iii). The clear inference is that a creditor may bring a state law claim, including one for lien foreclosure, against a Native corporation and its lands. As to developed land, subsection 1636(d) permits the lien foreclosure to go forward as discussed above. Undeveloped property, however, is expressly exempt from that judgment. Presumably the judgment can be otherwise collected from the Native corporation, but the plaintiff may not have execution of the judgment against undeveloped lands of the Native corporation defendant.

The court concludes that Congress has not preempted state law lien foreclosure actions. Rather, Settlement Act landowners have been provided with a federal defense against lien foreclosures as to undeveloped property. Removal is not permitted on the basis of a federal defense. Federal Tax Board of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 14, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983).

For the foregoing reasons, the court has heretofore ordered a remand of this case to the Superior Court for the State of Alaska.

DATED at Anchorage, Alaska, this 23 day of 1994.

H. Russell Holland, United States District Judge