United States: Limitations Period Doesn't Apply To Tribal Claim For Mismanagement Of Trust Funds

Steven Gordon and Philip Baker-Shenk are Partners in Holland & Knight's Washington D.C. office

Court of Federal Claims Ruling May Expand Damages That Can Be Recovered by Tribes

HIGHLIGHTS:

  • A decision by the Court of Federal Claims has important implications for breach of trust claims involving tribal trust funds.
  • Most claims for mismanagement of tribal trust resources are limited to the six-year period before a suit was filed but the court ruled that claims regarding mismanagement of tribal trust funds have no such limit.
  • The White Mountain Apache Tribe filed suit on March 15, 2017, alleging that the United States had breached its fiduciary duties by mismanaging tribal trust funds and natural resources from 1946 to the present. Its claims must be considered.

A decision by the U.S. Court of Federal Claims on Jan. 5, 2018, has important implications for breach of trust claims involving tribal trust funds. Most claims for mismanagement of tribal trust resources are limited to the six-year period before a suit was filed but the court ruled that claims regarding mismanagement of tribal trust funds have no such limit. This could make a huge difference in the amount of damages that a tribe can recover for mismanagement of its trust funds.

The White Mountain Apache Tribe filed suit on March 15, 2017, alleging that the United States had breached its fiduciary duties by mismanaging tribal trust funds and natural resources from 1946 to the present. The federal government moved to dismiss these claims to the extent that they arose before March 15, 2011, arguing that all claims before that date are barred by the six-year statute of limitations. The court agreed that tribal claims for mismanagement of its forests and grazing land were limited to the six-year period. But the court concluded that no such limit applies to the tribal claim for mismanagement of its trust funds.

Background

To understand the court's reasoning requires a brief review of some relevant history. In the late 1980s and early 1990s, Congress enacted a series of statutes requiring the federal government to audit and reconcile Indian trust accounts. In addition, starting in 1990, Congress added a provision to each appropriations act for the U.S. Department of the Interior (DOI) providing that the statute of limitations "shall not commence to run on any claim, ... concerning losses to or mismanagement of trust funds, until the affected tribe ... has been furnished with an accounting of such funds from which the beneficiary can determine whether there has been a loss." (emphasis added) This provision meant that, until a tribe received an accounting, it could file a claim for mismanagement of its trust funds that would cover the entire period of time back to 1946.

In 1991, the DOI engaged the accounting firm of Arthur Andersen & Co. to perform a reconciliation of Indian trust fund accounts. Subsequently, the scope of the project was narrowed to a set of "agreed procedures" on tribal accounts for the 20-year time period of Fiscal Years 1973-1992. Andersen concluded its work in fall 1995. The Bureau of Indian Affairs (BIA) prepared its own reconciled account statements for tribal trust funds for Fiscal Years 1993-1995. In 1996, the BIA provided what it called "reconciliation reports" to the tribes, which included the Andersen work product for 1973-1992 and the BIA work product for 1993-1995. These reconciliation reports had some significant flaws but tribes were concerned that the federal government would assert that, despite these flaws, the reconciliation reports fulfilled its statutory obligation to provide an "accounting" and triggered the six-year limitations period on breach of trust claims. This would have meant that most tribes had six years from 1996, when they received the reconciliation reports, to file an "unlimited" claim for mismanagement of their trust funds reaching back as far as 1946.

In 2002, saying it wanted to postpone the filing of needless tribal claims and instead encourage settlement negotiations, Congress provided that all of the reconciliation reports were deemed to have been received by tribes on Dec. 31, 1999. This effectively gave the tribes another three years, until the end of 2005, in which they could file an "unlimited" claim. At the end of 2005, Congress extended this period by another year. Many tribes took advantage of this provision and filed breach of trust suits in late 2006 in order to avoid any debate about whether the reconciliation reports had triggered the statute of limitations.  

But some tribes did not file suit by the end of 2006, such as the White Mountain Apache Tribe in its recent case. Meanwhile, Congress has continued to include in DOI appropriations acts the proviso that the statute of limitations does not start to run until a tribe has received an accounting from which it can determine whether there has been a loss. In the White Mountain Apache case, the court ruled that "the Tribe has not received a meaningful accounting from which to determine a loss" and so no limitations period applies to its claim for mismanagement of tribal trust funds. The court rejected the federal government's argument that the 1996 reconciliation reports, combined with the periodic statements of performance that all tribes now receive regarding their trust funds, constitute a reliable or complete accounting that meets the statutory standard.

Tribal Takeaways

This ruling presents an important opportunity for any other tribe that has not yet filed and concluded a breach of trust claim regarding mismanagement of its tribal trust funds. The absence of a limitations period makes a very large difference in evaluating the prospective damages that the tribe could recover through such a claim.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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