In California, a state appeals court has upheld an earlier jury ruling that the La Posta Band of Diegueno Mission Indians must pay the Yavapai-Apache Nation almost $49 million in order to satisfy a loan it took out to build its ultimately unsuccessful La Posta Casino.

With a membership of only about 15 adults, the La Posta Band of Diegueno Mission Indians is one of the smallest federally-recognized tribes in California. Court documents show that it agreed a deal to borrow some $23 million from the Yavapai-Apache Nation in 2007 for the purposes of building the 20,000 sq ft La Posta Casino but the gambling establishment located approximately 56 miles east of San Diego was unable to turn a profit and closed less than five years later with the band subsequently defaulting on the loan.

Based on the Yavapai-Apache Nation Indian Reservation just north of Phoenix, Arizona, and with an enrolled membership of about 2,400 people, the Yavapai-Apache Nation went to court in order to get its money back and was rewarded in October of 2014 when a jury ordered the La Posta Band of Diegueno Mission Indians to repay the loan along with interest, which amounted to just over $44.7 million.

In its Wednesday ruling, the California Court of Appeal for the Fourth District endorsed this earlier judgment and ordered the La Posta Band of Diegueno Mission Indians to repay the loan and interest, which has since grown to $48.8 million.

“Although [the] La Posta [Band of Diegueno Mission Indians] made efforts to reduce costs and obtain more customers, the casino was ultimately unsuccessful and [the] La Posta [Band of Diegueno Mission Indians] never made any payments under the loan agreement,” read the 43-page judgment written by Judge Judith Haller. “On our independent review, we determine the trial court’s conclusion was legally correct.”

However, the three-member San Diego court additionally agreed that the La Posta Band of Diegueno Mission Indians could not be forced to repay the debt using funds from its portion of the state’s Indian Gaming Revenue Sharing Trust Fund, which sees the California Gambling Control Commission financially assist smaller tribes or those operating casinos with less than 350 gambling devices. The California tribe is supposed to receive about $1.1 million each year as a result of this scheme and the court ruled that this cash is safe because the La Posta Band of Diegueno Mission Indians had not engaged in fraud in defaulting on the loan.

Although this portion of the verdict could be seen as a win for the La Posta Band of Diegueno Mission Indians, the small band may still be forced to hand over cash from the Indian Gaming Revenue Sharing Trust Fund due to the Yavapai-Apache Nation, which is responsible for the Cliff Castle Casino Hotel, earlier filing a lawsuit in the Arizona tribal court system. Although the trial has already taken place, no decision has been issued and the whole matter could once again come before the California courts.

“In reaching our conclusion that the issue is not ripe, we do not intend to suggest that the tribal court would be an appropriate or the most appropriate jurisdiction to decide the scope of the Yavapai-Apache Nation’s enforcement rights,” read the judgment from the California Court of Appeal for the Fourth District. “If the tribal court reaches a factual conclusion regarding fraud that is inconsistent with the final judgment in this case, the question regarding the impact of such a determination in a California enforcement proceeding would seem to be one in which a California court may have a substantial interest and the jurisdiction to decide independently. To the extent [the] La Posta [Band of Diegueno Mission Indians] is requesting this court to address whether the final judgment before us should serve as collateral “estoppels” or “res judicata” in any current tribal court proceedings, we decline to do so.”

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