Buchwald Capital Advisors, LLC v. Sault Ste. Marie Tribe of Chippewa Indians
584 B.R. 706
E.D. Mich.2018Background
- Greektown Holdings and affiliates filed Chapter 11; the Official Committee (later the Litigation Trustee) sued to avoid $177M in alleged fraudulent transfers under §§ 544/550 and Michigan's MUFTA, naming the Sault Ste. Marie Tribe and Kewadin Authority among defendants.
- The Tribe moved to dismiss on sovereign-immunity grounds; parties bifurcated the issues: (1) whether Congress abrogated tribal immunity in 11 U.S.C. §106, and (2) if not, whether the Tribe waived immunity by conduct.
- This Court previously held Congress did not abrogate tribal immunity under §106 and remanded to decide waiver; the Bankruptcy Court found no waiver and dismissed the Tribe; the Litigation Trustee appealed.
- Key undisputed facts: the Tribe participated in the bankruptcy claims/confirmation processes (filed proofs of claim, appearances, objections) but expressly reserved sovereign-immunity defenses; the Tribe’s Tribal Code/Charter requires a board resolution (or specific contractual language) to waive immunity, and no such board resolution or written contractual waiver exists.
- The Litigation Trustee alleged (accepted as true for waiver analysis) pervasive Tribe dominion and control over the Debtors and that the Tribe caused the Debtors to file bankruptcy; Trustee argued alter-ego/agency principles should attribute the Debtors’ conduct to the Tribe, effecting a waiver by litigation conduct.
- The District Court affirmed the Bankruptcy Court: tribal immunity was not waived because (a) Memphis Biofuels controls (charter-required board resolution absent), and (b) equitable alter-ego/veil-piercing or agency cannot be used to imply waiver of tribal sovereign immunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §106 of the Bankruptcy Code abrogated tribal sovereign immunity | §106 abrogates tribal immunity permitting avoidance actions | Congress did not clearly abrogate tribal immunity | Previously decided: §106 did not abrogate; remand concerned waiver only |
| Whether the Tribe waived immunity by participating in bankruptcy (filing proofs of claim/appearances/objections) | Participation and filings constitute waiver by litigation conduct sufficient to allow avoidance claims | Any waiver by litigation conduct is narrow and does not encompass unrelated adversary avoidance claims; Tribe expressly reserved defenses | Held: Participation did not waive immunity as to the MUFTA avoidance adversary; any waiver by litigation conduct is limited to adjudicating the tribe’s own claims (recoupment/setoff only) |
| Whether the Tribe’s alleged control of Debtors allows attribution of Debtor acts to Tribe (alter-ego/agency) to create waiver | If Debtors are alter egos of the Tribe, Debtors’ filing of the bankruptcy should be treated as Tribe conduct, producing a waiver by litigation conduct | Even if alter-ego/agency were proved, equitable doctrines cannot be used to imply waiver where tribal law requires express board resolution; no precedents applying veil-piercing to waive tribal immunity | Held: No court has used alter-ego/veil-piercing to imply waiver of tribal immunity; the Court refuses to create such a doctrine and rejects Trustee’s novel implied-waiver theory |
| Whether FSIA/foreign-sovereign alter-ego analogies can be applied to tribes | FSIA cases permit implied waiver via alter-ego analysis; analogous reasoning should apply | FSIA explicitly allows waiver by implication; tribal immunity is different and Supreme Court precedent forbids implied waivers for tribes | Held: FSIA analogies are inapt because FSIA contemplates implied waiver; tribal immunity doctrine forbids implied waiver absent clear, express consent |
Key Cases Cited
- Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. 751 (1998) (tribal sovereign immunity is common-law doctrine; waiver must be unequivocal)
- Memphis Biofuels, LLC v. Chickasaw Nation Indus., Inc., 585 F.3d 917 (6th Cir. 2009) (where charter requires board approval, waiver cannot be effected absent express board resolution; unauthorized official acts insufficient)
- Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978) (waivers of tribal sovereign immunity cannot be implied and must be unequivocally expressed)
- Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505 (1991) (tribal immunity protects against direct actions and cross-claims; limits on implied waiver)
- Sanderlin v. Seminole Tribe of Florida, 243 F.3d 1282 (11th Cir. 2001) (refusal to infer waiver from conduct; ordinance requiring council resolution controlled)
- Furry v. Miccosukee Tribe of Indians of Florida, 685 F.3d 1224 (11th Cir. 2012) (tort context; reiterated that waivers must be express; rejected implied-waiver theories)
- Gardner v. New Jersey, 329 U.S. 565 (1947) (state filing proof of claim in bankruptcy can constitute limited waiver of immunity, but the waiver is narrowly constrained)