Arizona Court of Appeals Division Two Holds That Contract with Casino Signed by Marketing Director Is Insufficient to Waive Sovereign Immunity.

MM&A allegedly entered into a contract with Cliff Castle Casino, which is part of the Yavapai-Apache Nation.  MM&A filed a complaint alleging breach of contract and related claims.  It attached to the complaint copies of contracts and “Waiver of Sovereign Immunity” addenda, each of which purportedly had been signed by the casino’s current or former marketing director. 

The Superior Court granted the Nation’s motion to dismiss for lack of subject matter jurisdiction based upon the Nation’s assertion of sovereign immunity.  The Nation’s Constitution preserves its sovereign immunity except when the Tribal Council expressly waives it.  The Tribal Council, in turn, delegated some contract-making authority to the Cliff Castle Casino Board of Directors.  In support of its motion to dismiss, the Nation attached declarations stating that neither the Tribal Council nor the casino’s board had authorized the contracts or the waiver of sovereign immunity. 

MM&A appealed, arguing first that the casino’s marketing director had apparent authority to execute the contract and the waiver of sovereign immunity.  After reviewing many cases from other jurisdictions, the Court of Appeals followed the majority trend and held that equitable principles such as apparent authority may not defeat an assertion of sovereign immunity, particularly in light of the principles that waivers must be unequivocally expressed and are strictly construed in favor of the sovereign.

Second, MM&A argued that it should be entitled to further discovery and an evidentiary hearing concerning actual authority.  It argued that the casino’s marketing director had actual authority to execute the contract and waive sovereign immunity and that the casino had been making payments under the contract for several years.  In light of the Nation’s written policies and the declarations submitted by the Nation, the Court of Appeals held that the court did not abuse its discretion in concluding that further discovery was not necessary.  MM&A also argued that the evidence was incomplete because one of the waivers of sovereign immunity dated back to 2003 but the declarations focused on actions by the Tribal Council and casino board in 2006 and 2007.   The Court of Appeals rejected this argument, as well, reasoning that a waiver in 2003 would not have affected the outcome of the case because the action was based upon a later contract.

Judge Kelly authored the opinion; Judges Espinosa and Eckerstrom concurred