United States of America v. Two Bulls et al

Filing 47

ORDER adopting in part and rejecting in part 44 Report and Recommendation; sustaining 45 Objection to Report and Recommendation.; granting 28 Motion for Default Judgment. Signed by U.S. District Judge Jeffrey L. Viken on 2/13/20. (SB)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,

CIV. 17-5050-JLV
ORDER

vs.
DOROTHY A. TWO BULLS,
FRANCIS TWO BULLS and the
OGLALA SIOUX TRIBE,
Defendants.
INTRODUCTION

The United States brought this action seeking to foreclose on a loan
secured by a mortgage on property held in trust for defendant the Oglala Sioux
Tribe (“OST”) and leased to defendants Dorothy and Francis Two Bulls.
(Docket 20). The United States moved for default judgment and the OST
objected. (Dockets 28 & 35). The individual defendants have never made an
appearance in this action. Pursuant to 28 U.S.C. § 636(b)(1)(B) and the
court’s standing order of October 16, 2014, the court referred the motion for
default judgment to Magistrate Judge Veronica L. Duffy for a report and
recommendation (“R&R”). (Docket 43). The magistrate judge rejected the
OST’s objections, but concluded the motion for default judgment should be
denied without prejudice to allow the government to rectify errors in its
proposed decree of sale. (Docket 44). The government objects to the R&R in
part and proposes a new decree of sale. (Docket 45). The OST did not
respond to the government’s objections.

The court sustains the government’s objections. The R&R is adopted in
part and rejected in part. The court enters default judgment in favor of the
government, forecloses the individual defendants’ leasehold interest, and issues
a decree of sale directing the United States Marshal to sell the property.
I.

Facts
The magistrate judge described the facts of this case in the R&R.

(Docket 44 at pp. 2-4). No party objected to the factual recitation and the
court adopts it in full.1 The court adds only a few facts necessary to justify
portions of its default judgment and decree of sale. First, the parties agreed
that the provisions of South Dakota’s One Hundred Eighty Day Redemption
Mortgage Act, which provides, as its name suggests, for a 180-day redemption
period, governed the mortgage in this case.2 Docket 20-2 at p. 5; see also
SDCL § 21-49-11 et seq. Second, the government, acting through the
Department of Housing and Urban Development (“HUD”), commissioned an
appraisal of the property, located in Pine Ridge, South Dakota. (Docket 31).
The appraiser concluded the property was worth $48,356 on March 13, 2018.

1Of

particular importance for the judgment, the magistrate judge found
the individual defendants owed $69,887.89 on the promissory note when the
note’s owner, Wells Fargo, accelerated the debt in 2008. (Docket 44 at pp. 34). The government asks for this amount in its complaint and motion for
default judgment. (Dockets 20 at p. 7 & 28 at p. 5).
2HUD

regulations state a lender must comply with applicable tribal law.
24 C.F.R. § 1005.113. However, neither the government nor the OST suggest
OST law governs this foreclosure action. Instead, the government cites South
Dakota foreclosure law in its briefing. Because both the mortgage and the
government invoke South Dakota law, the court looks to that law in crafting
the terms of the foreclosure.
2

Id. at ¶ 7. As of the date of the appraisal, the property was occupied by a
“Mrs. Two Bulls,” presumably referring to defendant Dorothy Two Bulls. Id. at
¶ 5.
II.

Plaintiff’s Objections
The government raises one implicit and one explicit objection to the R&R.

The R&R recommended denying the government’s motion for default judgment
without prejudice. (Docket 44 at p. 18). The government, in what the court
construes as an objection, instead asks the court to enter default judgment
and proposes an amended decree of sale. (Docket 45 at p. 4). The
government also objects to the magistrate judge’s suggestion that it be required
to transfer title to a statutorily qualified owner within 180 days of obtaining
title through foreclosure. (Docket 45 at pp. 2-3). The OST did not respond to
the government’s objections. The court sustains both objections.
The magistrate judge appears to have recommended the court deny the
motion for default judgment without prejudice in order to encourage the
government and the OST to reach mutually acceptable terms for a proposed
judgment and decree of sale. (Docket 44 at p. 18). However, the OST gave no
indication that it opposed the amendments the government made in the
proposed decree of sale it filed with its objections. The court finds requiring
the government to again move for default judgment under these circumstances
would not be an efficient use of judicial resources. The government’s implicit
objection is sustained.

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The government’s explicit objection relates to the amount of time needed
to sell or otherwise transfer title to the leasehold interest in the property. As
the magistrate judge noted, after receiving title through foreclosure, the
government may only transfer the leasehold interest to “an eligible tribal
member, the tribe, or the Indian housing authority serving the tribe[.]”
(Docket 44 at p. 7) (quoting 12 U.S.C. § 1715z-13a(h)(2)). The magistrate
judge suggested the court order 15 days for the individual defendants to
exercise their right to redeem the property and 180 days for the government to
transfer the leasehold to an eligible buyer.3 Id. at p. 11. The government
asserts 180 days is insufficient to ensure an eligible buyer is found. (Docket
45 at pp. 2-3). It recommends a year for the transfer period with the option to
petition for additional time. Id. at p. 3.
There appears to be no statute or regulation governing how long the
government may possess a foreclosed leasehold interest in trust land. See
12 U.S.C. § 1715z-13a(h)(2); 24 C.F.R. § 1005.107(b)(3). The OST’s concern
that foreclosure could result in the government possessing the leasehold
interest for an unlimited period of time—“effectively preclud[ing] the Tribe . . .
from using the leasehold interest—and the underlying trust property—for
housing or other purposes”—is well-placed. (Docket 41 at ¶ 9). A limit on the

3As

the magistrate judge noted, the lease between the OST and the
individual defendants provided a 15-day redemption period in the event of
default on a mortgage secured by the leasehold interest. (Docket 20-5 at
¶ 12). But the mortgage itself provides a 180-day redemption period. (Docket
20-2 at p. 5). The court finds a 180-day redemption period is appropriate.
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amount of time the government may possess the leasehold interest is
warranted. However, as noted in the appraisal report, the real estate market
in Pine Ridge is challenging due to the lack of fee land and the high levels of
unemployment. (Docket 31-1 at p. 5). The court agrees with the government
that 180 days may be insufficient to transfer the leasehold. The court finds a
period of a year to transfer the leasehold is appropriate. If necessary, the
government may move for additional time to transfer the leasehold interest
upon a showing of the reasons why a year was insufficient to transfer the
leasehold.
The government does not object to the other matters the magistrate judge
recommended addressing in the proposed judgment and decree of sale and
amended its proposal accordingly. See Docket 45-1. The court enters a
judgment and decree of sale consistent with the government’s proposal.
ORDER
For the reasons given above, it is
ORDERED that the government’s objections to the magistrate judge’s
report and recommendation (Docket 45) are sustained.
IT IS FURTHER ORDERED that the report and recommendation (Docket
44) is adopted in part and rejected in part.
IT IS FURTHER ORDERED that the government’s motion for default
judgment as to defendants Dorothy Two Bulls and Francis Two Bulls (Docket
28) is granted.

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IT IS FURTHER ORDERED that the Clerk of Court shall send a copy of
this order, the judgment and the decree of sale, all filed contemporaneously
with this order, to Dorothy and Francis Two Bulls at the following address:
P.O. Box 881
Pine Ridge, South Dakota 57770
IT IS FURTHER ORDERED that the Clerk of Court shall send a copy of
this order, the judgment and the decree of sale, all filed contemporaneously
with this order, to the United States Marshal.
Dated February 13, 2020.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
UNITED STATES DISTRICT JUDGE

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