Legend Lake Property Owners Association Inc v. United States Department of The Interior et al

Filing 25

DECISION AND ORDER GRANTING signed by Judge William C Griesbach on 2/6/24. Defendant's 14 motion to dismiss is GRANTED. The Menominee Indian Tribe of Wisconsin's 21 motion for leave to file an amicus brief id DENIED. This case is dismissed. The Clerk is directed to enter judgment. (cc: all counsel)(Griesbach, William)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
LEGEND LAKE PROPERTY OWNERS
ASSOCIATION INC.,
Plaintiff,
v.

Case No. 23-C-480

UNITED STATES DEPARTMENT
OF THE INTERIOR, et al.,
Defendants.
DECISION AND ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
Plaintiff Legend Lake Property Owners Association Inc. filed this action under the
Administrative Procedures Act (APA), 5 U.S.C. § 701, et seq., against Defendants United States
Department of the Interior (DOI); Deb Haaland, in her official capacity as United States Secretary
of the Interior; Bureau of Indian Affairs (BIA); Tammie Poitra, in her official capacity as the
Midwest Regional Director of the Bureau of Indian Affairs; the Acting Midwest Regional Director
of the Bureau of Indian Affairs; and the Interior Board of Indian Appeals (IBIA). The Association
seeks judicial review of a March 24, 2023 decision issued by the IBIA, arising from the appeal of
two decisions by the Midwest Regional Director of the BIA and the Acting Midwest Regional
Director of the BIA, to accept lands into trust by the United States for the Menominee Indian Tribe
of Wisconsin. The Association claims that the IBIA’s March 24, 2023 decision violated the APA
and that Defendants’ unlawful agency action has injured the Association and its members.

It

seeks a declaratory judgment that the IBIA’s decision violates the APA and should be vacated
and/or remanded. This matter comes before the court on Defendants’ motion to dismiss pursuant

to Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim.
For the following reasons, the motion will be granted and the case will be dismissed.
BACKGROUND
The Menominee Indian Tribe of Wisconsin is a federally recognized Indian Tribe, and the
Tribe’s reservation was established by the Treaty of Wolf River in 1854. See Menominee Tribe of
Indians v. United States, 391 U.S. 404, 405 (1968). In 1954, Congress enacted the Menominee
Indian Termination Act, which terminated federal supervision over the property and members of
the Menominee Indian Tribe of Wisconsin. See Pub. L. No. 83-397, 68 Stat. 250 (1954). In 1973,
however, Congress passed the Menominee Restoration Act (MRA) to repeal the Termination Act
and its prior termination policies. See Pub. L. No. 93-197, 87 Stat. 770. Under the MRA, “[t]he
Secretary shall accept the real property (excluding real property not located in or adjacent to the
territory constitution, on the effective date of this Act, the county of Menominee, Wisconsin) of
members of the Menominee Tribe, but only if transferred to him by the Menominee owner or
owners.” Id. at 773.
The Association is a corporation existing under the laws of the State of Wisconsin and is
an association of property owners for properties in and around Legend Lake in Menominee
County, Wisconsin. The Legend Lake area was initially developed in the late 1960s. The Legend
Lake Property Owners Association was created in 1972 through the filing of articles of
incorporation with the State of Wisconsin and the Menominee County Register of Deeds.
Membership in the Association was declared appurtenant to lot ownership.
On June 13, 2009, the Association adopted restrictive covenants. The restrictive covenants
were recorded with the Menominee County Register of Deeds on June 18, 2009, and were intended
to maintain the property values of Legend Lake properties by ensuring compliance with state and
local governance and with the membership responsibilities of the Association, as well as to
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preserve the tax base of Menominee County. All Legend Lake properties subject to the restrictive
covenants could be held, sold, or conveyed in accordance with the restrictive covenants. The
restrictive covenants are binding upon all parties that acquire or hold any right, title, or interest in
the properties, along with their heirs, personal representatives, successors, or assigns.
As relevant here, Article 1 of the restrictive covenants contains the following restrictions
on transfer:
B. Without the express written consent of the Association, which to be effective
must be duly voted upon and approved by the Association’s membership by
amendment to the bylaws, no owner of any interest in the Subject Real Estate to any
individual, entity (whether corporation, limited liability company, limited
partnership, limited liability partnership, general partnership or otherwise),
organization, or sovereign or dependent sovereign nation, or during the period of
ownership take any action, the result of which could or would
(1)
remove or eliminate the Subject Real Estate (or any part thereof)
from the tax rolls of Menominee County, Wisconsin,
(2)
diminish or eliminate the payment of real estate taxes duly levied or
assessed against the Subject Real Estate (or any part thereof),
(3)
remove the Subject Real Estate (or any part thereof) from the zoning
authority and general municipal jurisdiction of Menominee County, Wisconsin,
(4)
remove the Subject Real Estate (or any part thereof) from the general
municipal jurisdiction of the State of Wisconsin, to include administrative
regulations duly adopted,
and/or
(5)
remove the Subject Real Estate (or any part thereof) from the
obligations and/or restrictions imposed on the Subject Real Estate (or any part
thereof) by the duly adopted bylaws and resolutions of the Association, to include,
without limitation, the obligation to pay all dues and assessments properly levied by
the Association.
C. This Restriction on Transfer of Paragraph 1 shall apply to the transfer of an
interest in the entity that is an owner of the Subject Real Estate if, as a result of the
transfer, any of items (1) – (5) above could or would occur. This restriction shall,
among other things, expressly apply to any application to have the Subject Real
Estate (or any part thereof) placed into federal trust pursuant to the Indian
Reorganization Act.
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D. Any owner of an interest in the Subject Real Estate (or any part thereof) shall at
all times comply with any and all municipal and Association laws, rules, regulations,
and obligations as set forth in the foregoing restrictions, to include, without
limitation, the property tax collection laws set forth in Chapters 74 and 75 of the
Wisconsin Statutes. The Subject Real Estate remains subject to said municipal
and Association laws, rules, regulations and obligations, in rem,
notwithstanding a transfer to an owner not otherwise subject to them.
E. Any purported transfer of any interest in the Subject Real Estate (or any
part thereof) in violation of these restrictions shall be null and void.
Compl. ¶ 21, Dkt. No. 1.
Sometime after 2017, Guy F. Keshena acquired title to 40 parcels (the Properties) and is
the current title owner of the Properties within the Legend Lake development. Keshena was aware
of the restrictive covenants at the time he acquired the Properties.

Pursuant to a Tribal

authorization, Keshena took title to the Properties as “Guy F. Keshena, a single person for and on
behalf of the Menominee Indian Tribe of Wisconsin.” Id. ¶ 24. Keshena took title to the Properties
for the express purpose of further conveyance of the Properties to the United States of America in
trust for the Menominee Indian Tribe of Wisconsin.
Notwithstanding the restrictive covenants, the Menominee Indian Tribe of Wisconsin
requested that the Properties be accepted into trust pursuant to the MRA. Shortly thereafter, the
BIA’s Midwest Regional Director issued determinations on June 12, 2018, June 14, 2018, and
August 22, 2018, accepting the Properties into trust pursuant to 25 C.F.R. Part 151. On December
11, 2018, the Association filed a notice of appeal with the IBIA, seeking review of the Midwest
Regional Director’s determinations. The notice of appeal argued, among other things, that the
acceptance of the Properties into trust would violate the restrictive covenants.
On March 24, 2023, the IBIA affirmed the determinations of the Midwest Regional
Director. On appeal, the Association argued that the Properties are subject to the Association’s
restrictive covenants that prohibit transfers of properties if the transaction would remove the
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property from the County tax rolls or from state and local municipal jurisdiction. Dkt. No. 1-3 at
3. The IBIA determined that the Midwest Regional Director did not err in accepting the Properties
into trust because Section 6(c) of the MRA compelled such action. Section 6(c) provides:
The Secretary shall accept the real property (excluding any real property not located
in or adjacent to the territory constituting, on the effective date of this Act, the
county of Menominee, Wisconsin) of members of the Menominee Tribe, but only if
transferred to him by the Menominee owner or owners. Such property shall be
subject to all valid existing rights including, but not limited to, liens, outstanding
taxes (local, State, and Federal), mortgages, and any other obligations. The land
transferred to the Secretary pursuant to this subsection shall be subject to foreclosure
or sale pursuant to the terms of any valid existing obligation in accordance with the
laws of the State of Wisconsin. Subject to the conditions imposed by this subsection,
the land transferred shall be taken in the name of the United States in trust for the
Menominee Tribe of Wisconsin and shall be part of their reservation. The transfer
of assets authorized by this section shall be exempt from all local, State, and Federal
taxation. All assets transferred under this section shall, as of the date of transfer, be
exempt from all local, State, and Federal taxation.
87 Stat. at 773. The IBIA explained that the MRA imposes two requirements for mandatory trust
acquisition on behalf of the tribe: (1) the property be located in or adjacent to Menominee County,
Wisconsin and (2) the property be transferred by a member of the Menominee Tribe. Dkt. No. 13 at 5. It noted that, as relevant to the appeal, the Association’s restrictive covenants prohibit
transfer of any interest in property that is subject to its terms, without the written consent of the
Association, if such transfer would result in “(1) removing the property from the County tax rolls;
(2) diminishing or eliminating the payment of real estate taxes assessed against the property;
(3) removing the property from County zoning authority; (4) removing the property from the
jurisdiction of the state; or (5) removing the property from obligations or restrictions imposed on
it by the Association.” Id. at 6 (citing Covenants, art. 1(B)(1)–(5)). The IBIA concluded that the
restrictive covenants were preempted by federal law and are unenforceable against the Secretary
because they “directly interfere with and are contrary to both the terms and objectives of the
MRA.” Id. at 11.
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LEGAL STANDARD
A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges
the jurisdiction of this court of the subject matter jurisdiction in the complaint. Fed. R. Civ. P.
12(b)(1). To survive a Rule 12(b)(1) motion, the plaintiff must establish that the jurisdictional
requirements have been met. Schaefer v. Transp. Media, Inc., 859 F.2d 1251, 1253 (7th Cir. 1988).
The proponent of federal jurisdiction must “prove those jurisdictional facts by a preponderance of
the evidence.” Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir. 2006).
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint to
state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). Rule 8 mandates that a
complaint need only include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Supreme Court has held that a complaint must
contain factual allegations that “raise a right to relief above the speculative level.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). While a plaintiff is not required to plead detailed factual
allegations, he or she must plead “more than labels and conclusions.” Id. A simple, “formulaic
recitation of the elements of a cause of action will not do.” Id. In evaluating a motion to dismiss,
the court must view the plaintiff’s factual allegations and any inferences reasonably drawn from
them in a light most favorable to the plaintiff. See Yasak v. Ret. Bd. of the Policemen’s Annuity &
Benefit Fund of Chi., 357 F.3d 677, 678 (7th Cir. 2004).
ANALYSIS
Before turning to the merits of Defendants’ motion, the court must first address the
jurisdictional requirement of whether the Association has standing to pursue this action. Federal
courts do not have jurisdiction to decide every legal question that may arise. Instead, Article III
of the United States Constitution limits the jurisdiction of federal courts to actual “cases” or
“controversies” brought by litigants who demonstrate standing. U.S. Const. art. III, § 2, cl. 1. The
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doctrine of standing is not an esoteric doctrine that courts use to avoid difficult decisions; it “serves
to prevent the judicial process from being used to usurp the powers of the political branches.”
Clapper v. Amnesty Int’l USA, 568 U.S. 398, 408 (2013). “In light of this ‘overriding and timehonored concern about keeping the Judiciary’s power within its proper constitutional sphere, we
must put aside the natural urge to proceed directly to the merits of an important dispute and to
“settle” it for the sake of convenience and efficiency.’” Hollingsworth v. Perry, 570 U.S. 693,
704–05 (2013) (quoting Raines v. Byrd, 521 U.S. 811, 820 (1997)) (alterations omitted). “The
familiar ‘triad of injury in fact, causation, and redressability constitutes the core of Article III’s
case-or-controversy requirement.’” Gracia v. SigmaTron Int’l Inc., 986 F.3d 1058, 1064 (7th Cir.
2021) (quoting Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 103–04 (1998)). The plaintiff
bears the burden of establishing each element. Id. (citation omitted).
Defendants assert that the Association lacks standing to challenge the DOI’s trust
acquisitions because it has not pled an actual or imminent injury fairly traceable to DOI’s actions.
The Association alleges that its restrictive covenants require compliance with all Association laws,
rules, regulations, and obligations, including the obligation to pay all dues and assessments
properly levied by the Association. Compl. ¶ 21. The Association’s purpose is to ensure
maintenance and preservation of the properties in the Legend Lake Association. The Association
is harmed by the removal of significant amounts of land and, in turn, dues and assessments, that
would otherwise be collected by the Association. In short, the Association has pled an actual or
imminent injury resulting from the DOI’s acceptance of the Properties into trust. The court will
now turn to the merits of the motion.
The APA authorizes suit by “a person suffering legal wrong because of agency action, or
adversely affected or aggrieved by agency action . . . to judicial review thereof.” 5 U.S.C. § 702.
The APA allows a district court to “hold unlawful and set aside” any agency action that is
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“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
§ 706(2)(A). The Association asserts that Defendants’ actions to accept the Properties into trust
while also declaring the Association’s restrictive covenants unenforceable was arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law. It argues that
Defendants should have accepted the Properties into trust with the restrictive covenants attached
and that the IBIA should not have made any holding as to the restrictive covenants’ enforceability.
As an initial matter, the Association argues that the IBIA exceed its authority in deciding
whether the restrictive covenants were preempted because a federal agency, like the IBIA, does
not have the authority to decide such constitutional questions. See Pl.’s Br. at 16, Dkt. No. 18.
But the IBIA did not improperly decide the preemption issue. Indeed, the IBIA “has full authority
to review any legal issues raised in a trust acquisition case, except those challenging the
constitutionality of laws or regulations.” See South Dakota v. Acting Great Plains Reg’l Dir., 49
IBIA 129, 141, 2009 WL 1356400, at *9 (2009) (citation omitted). In this case, the IBIA did not
decide the constitutionality of a law or regulation. Rather, in considering the trust acquisition, the
IBIA was required to address the Association’s contention that its restrictive covenants barred the
trust acquisition mandated by the MRA. Resolving the issues of whether the Association’s
restrictive covenants were enforceable, whether the restrictive covenants overrode the MRA’s
mandate, and whether they prevented the BIA from taking the Properties into trust was within the
scope of the IBIA’s authority.
The Association also argues that, even if the IBIA had the authority to decide the
preemption issue, the MRA does not preempt the restrictive covenants. The Association concedes
that the MRA mandates that the DOI accept the Properties into trust if the land is located within
Menominee County and the land is transferred to the Secretary by a Menominee tribal member.
See MRA § 6(c), 87 Stat. at 773 (“The Secretary shall accept the real property (excluding any real
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property not located in or adjacent to the territory constituting, on the effective date of this Act,
the county of Menominee, Wisconsin) of members of the Menominee Tribe, but only if transferred
to him by the Menominee owner or owners.”). Instead, the Association argues that the MRA
mandates other conditions to place land in trust, including that “the transfer be subject to any
property rights or obligations and any contractual rights or obligations” and “the property
transferred shall be subject to all valid existing rights including, but not limited to, liens,
outstanding taxes (local, state, and federal), mortgages, and any other obligations.” Pl.’s Br. at 4
(citing MRA §§ 3(d); 6(c)). These additional conditions, the Association argues, are broad enough
to encompass the restrictive covenants such that the MRA does not preempt them.
But Sections 3(d) and 6(c) do not impact the preemption analysis. Defendants could not
have accepted the Properties into trust with the restrictive covenants attached as the Association
suggests. The Association’s restrictive covenants bar “any application to have the Subject Real
Estate (or any part thereof) placed into federal trust pursuant to the Indian Reorganization Act”
and bar any transfer of land to a “sovereign or dependent sovereign nation” that “could or would
remove or eliminate the Subject Real Estate (or any part thereof) from the tax rolls of Menominee
County, Wisconsin,” zoning authority, and general municipal jurisdiction of the county or the State
of Wisconsin. Compl. ¶ 21. The restrictive covenants state that “[a]ny purported transfer of
interest in the Subject Real Estate (or any part thereof) in violation of these restrictions shall be
null and void.” Id. The BIA could not comply with both the MRA’s statutory mandate to place
parcels of land transferred to the Secretary by a Menominee tribal member into trust for the
Menominee Indian Tribe without the exercise of discretion and the Association’s restrictive
covenants that prevent the BIA from taking such land into trust. In addition, the MRA’s mandate
that the Properties be removed from the county tax rolls and exempt from all local, State, and
Federal taxation directly conflicts with the restrictive covenants’ provisions that the subject real
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estate cannot be removed from the tax rolls of Menominee County. Therefore, the IBIA did not
act arbitrarily and capriciously in finding that the MRA conflicts with and preempts the
Association’s restrictive covenants that purport to bar the trust acquisitions.
The Association alternatively requests that, in the event the court finds that federal law
preempts certain provisions of the restrictive covenants, the court should hold that the remainder
of the restrictive covenants are not preempted and are thus valid and enforceable under the
covenant’s severability clause. The enforceability of the Association’s restrictive covenants that
were not relevant to the trust acquisitions was never addressed by the BIA or IBIA. Because this
argument was not addressed in the underlying final agency decision, the court will not decide it
here.
CONCLUSION
For these reasons, Defendants’ motion to dismiss (Dkt. No. 14) is GRANTED. The
Menominee Indian Tribe of Wisconsin’s motion for leave to file an amicus brief (Dkt. No. 21) is
DENIED. This case is dismissed. The Clerk is directed to enter judgment forthwith.
SO ORDERED at Green Bay, Wisconsin this 6th day of February, 2024.
s/ William C. Griesbach
William C. Griesbach
United States District Judge

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