Pub. 13 2016 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S Spring • 2016 15 bond documents to the jurisdiction of federal or state courts inWis- consin, to the exclusion of any tribal court, exhaustion of remedies in tribal courts by the bondholders was not required. Waivers of Sovereign Immunity Upheld: In attempting to invalidate the waivers of sovereign immunity contained in the transaction documents, the tribal entities raised several defenses, including that the tribal resolution and bond resolution did not spe- cifically contain waivers of sovereign immunity; therefore, the trib- al entities had not waived their sovereign immunity. The Seventh Circuit concluded that, because the bond resolution approved all the legal provisions in other transaction documents, including the waivers of sovereign immunity, the waivers of sovereign immuni- ty were effective as to all the transaction documents, including the resolutions. Documents Were Not “Management Contracts” Under IGRA: The tribal entities also argued that the waivers of sovereign immunity were unenforceable because they were contained in col- lateral, unapprovedmanagement contracts, which the tribe alleged were void under IGRA. The Seventh Circuit disagreed, concluding that a document that is “collateral” to a management contract only in the sense that it is related does not require approval under IGRA; it is only when a related agreement also provides for management of all or part of a gaming operation that approval under IGRA is required. Because the bond documents in question did not provide formanagement of any part of the borrower’s gaming operation, no approval under IGRA was required. Enjoining the Tribal Court Action Proper: After conclud- ing that tribal court exhaustion was not required and that the trib- al entities waived their sovereign immunity, the Court of Appeals concluded that the district court properly enjoined the tribal court action. Key Provisions in Your Loan Documents: To avoid am- biguity and reduce the risk of costly litigation in a loan transaction between a non-Indian lender and an Indian borrower, the parties should ensure that the tribal resolutions and resolutions of any In- dian-owned borrowing entity authorizing the loan transaction and all loan documents contain effective waivers of sovereign immunity and consents to exclusive jurisdiction in state or federal courts for any claims arising from the transaction. Another issue highlighted by this case arises in loans made to tribes to finance gaming operations. When financing a project cov- ered by IGRA, the parties should ensure that any provision that could be construed to be related to gamingmanagement be exclud- ed from any loan document and isolated in a separate agreement. Isolation of such gaming management provisions may prevent claims that the loan documents are void if approval under IGRA was not obtained for those documents. A better practice, if time permits, is to seek what is known as a “declination letter” from the National Indian Gaming Commission, which involves submission of the loan documents to the Commission and, if appropriate, issu- ance by Commission counsel of a letter containing opinions that the loan documents are not management contracts under IGRA and do not require the approval of the Commission.  Debbie Ramirez is a Shareholder in the Modrall Sperling Law Firm in Albuquerque and Santa Fe. She represents NewMexico and national lenders throughout the state and may be reached at (505) 848-1800 or debbie.ramirez@modrall.com. 1 Stifel, Nicholaus & Company, Inc. v. Lac du Flambeau Band of Lake Superior Chippewa Indians, 807 F.3d 184 (7th Cir. 2015). 2Stifel,Nicholaus&Company,Inc.v.LacduFlambeauBandofLakeSuperiorChippewaIndians,2014U.S.Dist.LEXIS67474 (W.D.Wisc.2014). Zia Trust, Inc. The Advisors’ Trust Company ® www.ziatrust.com 800.996.9000  No in-house asset management - we use your bank’s advisor  13 trust officers, including JDs, CFP ® and CTFA ® practitioners  Offices in Albuquerque, Las Cruces, Santa Fe, and Phoenix  Complex trusts over $100,000,000 – to trusts under $1,000,000, and everything in between  Old fashioned “face to face” service. We’re accessible!  Closely held business trusts/ specialty assets Offering Caring and Competent Trust Administration/ Operations Throughout New Mexico and Arizona