Casino owner files suit against Spokane Tribe

The future of one of the state’s oldest Indian-owned casinos may hinge on the outcome of a lawsuit filed last month by a Spokane tribal member against his own tribe.

The owner of the Double Eagle Casino in Chewelah has sued the Spokane Tribal Business Council after the council pulled tribal-owned slot machines out of his gambling facility and then thwarted his attempt to bring in new machines.

The lawsuit filed by tribal member Ronald “Buzz” Gutierrez in Spokane Tribal Court seeks more than $30 million in damages as a result of the tribe’s alleged breach of a lease agreement with the Double Eagle and “tortuous interference” with the casino’s attempt to negotiate a deal for replacement gambling devices with an Oklahoma gaming company.

Named as defendants are the tribe; its chairman, Greg Abrahamson; vice chairman, Warren Seyler; secretary, Gerald Nicodemus; councilmen David C. Wynecoop Jr. and Ricky Sherwood; tribal gaming commissioner Ron Samuels; and the tribe’s gaming attorney, Scott Crowell.

“We’re not the aggressors here,” said Gutierrez’s attorney, Robert Rosette of Mesa, Ariz. “All Buzz is trying to do is continue to operate.”

The Double Eagle, the first casino on Spokane Indian trust land, has been “closed for remodeling” since the tribe removed its 250 slot machines from the facility on Sept. 23, Gutierrez said. “We are hoping to reopen no later than Oct. 14.”

Tribal council members declined to comment on the case.

Crowell, who represents the tribe on gaming matters, said, “I don’t believe the suit has any merit.” But he, too, declined further comment because he is named as a defendant.

On Monday, the defendants filed a motion for dismissal, citing the tribe’s sovereign immunity from being sued, according to tribal attorney Rory Flint Knife. Since the suit was filed late last month, Gutierrez’s attorney has requested an emergency hearing on the matter and the disqualification of tribal Associate Judge David Harding, who is brother-in-law to Nicodemus, one of the defendants.

The Double Eagle, which has been in operation since June 1986 under a series of land lease agreements with the tribe, is a “grandfathered” gambling facility. Because it was operating before the Indian Gaming Regulatory Act of 1988, it may continue to operate provided it pays 60 percent of its net revenue to the tribe and pays an annual fee to the National Indian Gaming Commission.

Since June 1996, the tribe has leased Double Eagle floor space for some of its Class III gaming devices. Federal law regulates three types of gaming: Class I includes social games like raffles, with prizes of minimum value. Class II includes games of chance, like bingo or its electronic equivalent. Class III is just about every other type of gambling, including slot machines.

Gutierrez said the tribe has made $17 million on its slot machines at the Double Eagle since they were installed nine years ago and $25 million from the casino since it opened 19 years ago.

In September 2004, an audit by the National Indian Gaming Commission found three “potential notice of violations” involving the Spokane Tribal Gaming Commission, the Double Eagle and two other individually owned casinos. They included failure to provide annual audit statements, failure to provide NIGC fees and quarterly statements, and failure to perform background checks for key employees.

With Crowell’s advice, steps were taken to remediate these findings, which resulted in no enforcement action by the NIGC, the lawsuit claims.

In a May 3 resolution, the tribal council, claiming the lease agreement with the Double Eagle was out of compliance with federal law, terminated its contract with Gutierrez effective Sept. 23. The resolution also said the lease agreement exposed the tribe to potential fines and enforcement action and that the slot machines were generating less revenue than gaming devices at tribally owned and operated facilities.

In June, Gutierrez entered into negotiations with Rocket Gaming Systems for lease of Class II gambling devices. By July, Gutierrez said, the talks with Rocket Gaming representative Jason Ashmann resulted in “a done deal.”

Then on July 26, at a Northwest Indian Gaming Conference, Crowell and Samuels approached Ashmann and told him that Rocket Gaming’s machines would not be licensed by the Spokane Tribal Gaming Commission and that action would be taken if he installed them in the Double Eagle, the lawsuit claims.

Rocket Gaming backed out of the deal with Double Eagle.

On Aug. 3, Abrahamson told Gutierrez the council would not approve the Double Eagle conducting games beyond the Class II card games the casino offered before enactment of the Indian Gaming Regulatory Act in 1986.

“Such action will be viewed as jeopardizing the interests of the Spokane Tribe and appropriate action will be taken to protect the tribe’s interest,” Abrahamson wrote, citing ongoing negotiations with the state and federal governments.

The Spokane Tribe is the only tribe conducting gambling in Washington state without a gaming compact. The 9th U.S. Circuit Court of Appeals ruled in 1998 that the state was not negotiating in good faith with the tribe and dropped a federal injunction against tribal gambling operations. Last year the tribe resumed negotiations with the state.

“It’s strange to hear the tribe declare gaming illegal when they have fought for 20 years to protect that right,” Rosette said.

Regardless, the attorney said, it still does not allow the tribe out of its contractual obligation with Gutierrez. If the tribe can operate Class II devices, the attorney said, the Double Eagle can operate them. He said the casino had electronic bingo devices in 1986.

Rosette also said that a dispute resolution clause in the tribe’s space lease agreement with the Double Eagle waives the tribe’s sovereign immunity from civil action.

The lawsuit seeks a declaratory judgment from the Tribal Court that the Double Eagle is in compliance with state and federal laws and an injunction against the defendants until the court can determine whether the casino can continue to offer Class II and Class III gaming.

It also seeks $10.2 million for breach of contract, $10.2 million for the tribe’s “bad faith” dealings with the Double Eagle, and $10.2 million for interfering with Gutierrez’s ability to operate Class II gaming devices.

Gutierrez, a former tribal council member, sees himself as a pioneer in Indian gaming in Washington state, having defended his casino from state and federal authorities since first advising his tribe of its right to offer gambling in 1985.

Since then, he said, “Jealousies have surfaced. Tribal government changed hands. Now we are among a group of people who do not carry on the traditions of using gaming to empower the tribe.”

“They want to shut down the Double Eagle,” Gutierrez said.