Lexington Insurance Company v. Data Aire, Inc. et al

Filing 22

ORDER granting 21 Motion to Stay all Proceedings. Signed by District Judge Martin Reidinger on 04/29/2013. (thh)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
BRYSON CITY DIVISION
CIVIL CASE NO. 2:12cv97
LEXINGTON INSURANCE COMPANY,
Plaintiff,
vs.
DATA AIRE, INC. and TRANE U.S., INC.,
Defendants.
__________________________

)
)
)
)
)
)
)
)
)
_)

ORDER

THIS MATTER is before the Court on the parties’ Consent Motion to
Stay all Proceedings [Doc. 21].
PROCEDURAL HISTORY
On November 19, 2012, the Plaintiff filed an action in the General
Court of Justice, Superior Court Division, Swain County, North Carolina.
[Doc. 1-1]. On December 27, 2012, that action was removed to this Court
based on diversity jurisdiction.1 [Doc. 1]. In the Complaint, the Plaintiff, a
Delaware corporation, alleged that it had provided a property and business

1

In the Notice of Removal, the Defendants stated that they had been served on
December 3, 2012, making the removal timely. 28 U.S.C. §1446(b). Defendant Data
Aire, Inc. joined in the Notice of Removal on January 4, 2013. [Doc. 5].

loss insurance policy to Tribal Casino Gaming Enterprise (Tribal Casino) for
real and personal property which it owned at the Cherokee Casino and
Hotel in Cherokee, North Carolina. [Doc. 1-1]. Due to a “loss of cooling
event” which occurred on November 30, 2009 at the Casino, a claim was
made against that policy. [Id.]. The Defendants, each of which is a foreign
corporation, provided the products which allegedly caused the loss. [Id.].
Having paid the Casino under the terms of its policy, the Plaintiff brought
this subrogation action.
On November 20, 2012, the Plaintiff filed a parallel action in the
Cherokee Tribal Court for the Eastern Band of Cherokee Indians (Tribal
Court). [Doc. 21 at 2]. The parties do not dispute that the Tribal Court has
jurisdiction over the action filed in its Court due to the fact that the Casino is
located within the boundaries of the Eastern Band of Cherokee Indians
Reservation in Cherokee, North Carolina. [Id. at 2-3]. It is also clear from
the Consent Motion that the action in Tribal Court has continued apace
while this matter is in its early stages. [Id.]. The parties request a stay of
this action until the Tribal Court rules on a pending motion to dismiss. [Id.].
DISCUSSION
The United States Supreme Court has “repeatedly recognized the
Federal Government’s longstanding policy of encouraging tribal self2

government.” Iowa Mutual Insurance Company v. LaPlate, 480 U.S. 9, 14,
107 S.Ct. 971, 94 L.Ed.2d 10 (1987). “Tribal courts play a vital role in tribal
self-government[.]” Id.
A federal court’s exercise of jurisdiction over matters relating to
reservation affairs can also impair the authority of tribal courts[.]
… [C]onsiderations of comity direct that tribal remedies be
exhausted before the question is addressed by [a] District
Court. Promotion of tribal self-government and selfdetermination require[s] that the Tribal Court have the first
opportunity to evaluate the factual and legal bases for [any]
challenge to its jurisdiction. … Although … federal jurisdiction
in this case is based on diversity of citizenship, … the
exhaustion rule … applies here as well. Regardless of the
basis for jurisdiction, the federal policy supporting tribal selfgovernment directs a federal court to stay its hand in order to
give the tribal court a full opportunity to determine its own
jurisdiction. In diversity cases, as well as federal-question
cases, unconditional access to the federal forum would place it
in direct competition with the tribal courts, thereby impairing the
latter’s authority over reservation affairs.
Id. at 15-16 (internal quotations and citations omitted).
Thus, although this Court has jurisdiction, it will “stay its hand”
pending the exhaustion of Tribal Court remedies, despite the fact that the
Tribal Court action involves parties who are non-members of the Eastern
Band of Cherokee Indians. Id.; Nevada v. Hicks, 533 U.S. 353, 121 S.Ct.
2304, 150 L.Ed.2d 398 (2001). The reason is simple: the parties do not
dispute that the case involves property located within the reservation
boundaries; property, moreover, which is involved in tribal gaming. Strate
3

v. A-1 Contractors, 520 U.S. 438, 446, 117 S.Ct. 1404, 137 L.Ed.2d 661
(1997) (nonmembers who enter consensual relations with the tribe or into
activity that directly affects the tribe’s economic health subject to tribal court
jurisdiction); Montana v. United States, 450 U.S. 544, 101 S.Ct. 1245, 67
L.Ed.2d 493 (1981); Allstate Indemnity Company v. Stump, 191 F.3d 1071
(9th Cir. 1999), opinion amended on other grounds 197 F.3d 1031 (9th Cir.
1999) (even where there is a dispute as to whether an accident occurred
on tribal land, the tribal court has the first opportunity to address
jurisdiction); Fidelity and Guaranty Insurance Co. v. Bradley, 212
F.Supp.2d 163 (W.D.N.C. 2002).
The parties’ request that this Court stay the action only until the Tribal
Court rules on a pending motion to dismiss, a motion scheduled to be
heard in Tribal Court in early June 2013. In the event that the parties
thereafter seek to reopen this action, they are advised that they will be
required to show cause why this Court should not continue this stay
pending exhaustion of Tribal Court remedies.

4

ORDER
IT IS, THEREFORE, ORDERED that the parties’ Consent Motion to
Stay all Proceedings [Doc. 21] is hereby GRANTED and this action is
hereby STAYED pending further Order of this Court.
Signed: April 29, 2013

5