In re: Greektown Holdings, LLC, Debtor.
Sault Ste. Marie Tribe of Chippewa Indians; Kewadin Casinos Gaming Authority, Defendants-Appellees. Buchwald Capital Advisors, LLC, solely in its capacity as Litigation Trustee to the Greektown Litigation Trust, Plaintiff-Appellant,
Argued: October 17, 2018
from the United States District Court for the Eastern
District of Michigan at Detroit; No. 2:14-cv-14103-Paul D.
Borman, District Judge.
States Bankruptcy Court for the Eastern District of Michigan
at Detroit; Nos. 08-bk-53104; 10-ap-05712-Maria L. Oxholm,
Gregory G. Rapawy, KELLOGG, HANSEN, TODD, FIGEL &
FREDERICK, P.L.L.C., Washington, D.C., for Appellant.
S. Cowan, FROST BROWN TODD LLC, Cincinnati, Ohio, for
Gregory G. Rapawy, Michael K. Kellogg, Katherine C. Cooper,
KELLOGG, HANSEN, TODD, FIGEL & FREDERICK, P.L.L.C.,
Washington, D.C., Joel D. Applebaum, CLARK HILL PLC,
Birmingham, Michigan, for Appellant.
S. Cowan, FROST BROWN TODD LLC, Cincinnati, Ohio, for
Before: CLAY and GRIFFIN, Circuit Judges; ZOUHARY, District
Buchwald Capital Advisors, LLC, in its capacity as litigation
trustee for the Greektown Litigation Trust, appeals the
district court's January 23, 2018 order affirming the
bankruptcy court's dismissal of Plaintiff's complaint
on the basis of tribal sovereign immunity. Plaintiff's
complaint seeks avoidance and recovery of allegedly
fraudulent transfers made to Defendants Sault Ste. Marie
Tribe of Chippewa Indians and Kewadin Casinos Gaming
Authority pursuant to the Bankruptcy Code of 1978, 11 U.S.C.
§§ 544, 550. For the reasons set forth below, we
AFFIRM the district court's dismissal.
case arises out of the bankruptcy of Detroit's Greektown
Casino (the "Casino") and several related corporate
entities (collectively, the "Debtors"). Under the
ownership and management of Defendant Sault Ste. Marie Tribe
of Chippewa Indians and its political subdivision Defendant
Kewadin Casinos Gaming Authority (collectively, the
"Tribe"), the Casino opened in November 2000 and
filed for bankruptcy in May 2008.
the outset, the Tribe was under serious financial strain due
to two obligations incurred in connection with the Casino. In
2000, the Tribe entered into an agreement with Monroe
Partners, LLC ("Monroe") to pay $265 million in
exchange for Monroe's 50% ownership interest in the
Casino, giving the Tribe a 100% ownership interest in the
Casino. And in 2002, the Tribe entered into an agreement with
the City of Detroit to pay an estimated $200 million to build
a hotel and other facilities at the Casino in exchange for a
continued gaming license from the Michigan Gaming Control
2005, the Tribe restructured the Casino's ownership to
alleviate this strain. The Tribe created a new entity,
Greektown Holdings, LLC ("Holdings"), which became
the owner of the Casino, while several pre-existing
entities-all owned by the Tribe-became the owners of
Holdings. This allowed the Tribe to refinance its existing
debt, and allowed the intermediate entities to take on new
debt, all to raise capital so that the Tribe could meet its
financial obligations. Holdings, for example, took on $375
million of debt in various forms shortly after the
restructuring was subject to, and received, the approval of
the MGCB. However, the MGCB conditioned its approval on the
Tribe's adherence to strict financial covenants and other
conditions. If those covenants and conditions were not
satisfied, the MGCB could force the Tribe to sell its
ownership interest in the Casino, or place the Casino into
December 2, 2005, Holdings transferred approximately $177
million to several different entities. At least $145.5
million went to the original owners of Monroe-Dimitrios and
Viola Papas, and Ted and Maria Gatzaros. At least $9.5
million went to other entities for the benefit of Dimitrios
and Viola Papas, and Ted and Maria Gatzaros. And at least $6
million went to the Tribe.
the next three years, the Tribe attempted to raise additional
capital to fully meet its financial obligations. However, by
April 2008, the strain of these obligations had proved too
much to bear, and the Tribe was in danger of losing both its
ownership interest in the Casino- through failure to comply
with the MGCB's restructuring conditions-and the
Casino's gaming license-through failure to comply with
the City of Detroit's development requirements.
Accordingly, on May 29, 2008, the Debtors, including
Holdings, the Casino, and other related corporate entities,
filed voluntary petitions for Chapter 11
the Debtors' plan of reorganization, the Greektown
Litigation Trust (the "Trust") was created to
pursue claims belonging to the Debtors' estate for the
benefit of unsecured creditors. Plaintiff Buchwald Capital
Advisors, LLC (the "Trustee") was appointed as the
Trust's litigation trustee, and in that capacity, the
Trustee brought the instant case.
28, 2010, the Trustee filed a complaint in the United States
Bankruptcy Court for the Eastern District of Michigan. The
Trustee's complaint alleges that, on December 2, 2005,
Holdings fraudulently transferred $177 million to or for the
benefit of the Tribe, and seeks avoidance and recovery of
that amount pursuant to the Bankruptcy Code of 1978, 11
U.S.C. §§ 544, 550. The Tribe then filed a motion
to dismiss the complaint on the grounds that the Tribe
possessed tribal sovereign immunity from the Trustee's
claims. The Trustee responded that that the Tribe did not
possess tribal sovereignty (1) because Congress abrogated
tribal sovereign immunity in the Bankruptcy Code of 1978, 11
U.S.C. §§ 106, 101(27), and (2) because the Tribe
waived tribal sovereign immunity by actually or effectively
filing the Debtors' bankruptcy petitions. By stipulation of
the parties, the bankruptcy court bifurcated the Tribe's
motion-it would first decide whether Congress had abrogated
the Tribe's immunity and then, if necessary, whether the
Tribe had waived its immunity.
abrogation, the bankruptcy court denied the Tribe's
motion to dismiss, holding that Congress had expressed its
"clear, unequivocal, and unambiguous intent to abrogate
tribal sovereign immunity" in 11 U.S.C. §§
106, 101(27). (RE 1, Bankruptcy Court Opinion, No.
14-cv-14103, PageID # 43.) The Tribe appealed to the district
court, which reversed, holding that Congress had not
"clearly, unequivocally, unmistakably, and without
ambiguity abrogate[d] tribal sovereign immunity" in 11
U.S.C. §§ 106, 101(27). (RE 5, District Court
Opinion, PageID # 203.) The district court accordingly
remanded the case to the bankruptcy court to decide whether
the Tribe had waived its immunity.
waiver, and in light of the district court's holding on
abrogation, the bankruptcy court granted the Tribe's
motion to dismiss, holding (1) that the Tribe's
litigation conduct "was insufficient to waive [tribal]
sovereign immunity" since tribal law required an express
board resolution, (2) that waiver of tribal sovereign
immunity could not be "implied" through the
litigation conduct of a tribe's alter ego or agent, and
(3) that even if both of the above were possible, filing a
bankruptcy petition does not waive tribal sovereign immunity
"as to an adversary proceeding subsequently filed"
against the tribe. (Id., Bankruptcy Court Opinion,
at PageID # 449, 464, 456.) The Trustee appealed to the
district court which affirmed, similarly holding that no
waiver of the Tribe's sovereign immunity could occur
"in the absence of a board resolution expressly waiving
immunity," and that the Trustee's "novel theory
of implied waiver" through the "imputed"
conduct of an alter ego or agent was foreclosed by binding
precedent. (Id., District Court Opinion, at PageID #
730, 744, 737.)
appeal, regarding both abrogation and waiver, followed.
Standard of Review
appeal from a district court's review of a bankruptcy
court's order, we review the bankruptcy court's order
directly rather than the intermediate decision of the
district court. In re McKenzie, 716 F.3d 404, 411
(6th Cir. 2013). We review questions of subject matter
jurisdiction, including sovereign immunity, de novo.
DRFP, LLC v. Republica Bolivariana de Venezuela, 622
F.3d 513, 515 (6th Cir. 2010).
Abrogation of Tribal Sovereign Immunity
tribes have long been recognized as "separate sovereigns
pre-existing the Constitution." Michigan v. Bay
Mills Indian Cmty., 572 U.S. 782, 788 (2014) (quoting
Santa Clara Pueblo v. Martinez, 436 U.S. 49, 56
(1978)). As such, they possess the "common-law immunity
from suit traditionally enjoyed by sovereign powers."
Id. (quoting Santa Clara Pueblo, 436 U.S.
at 58). Yet this immunity is not without limit. Because
Indian tribes are subject to Congress' plenary authority,
Congress can abrogate tribal sovereign immunity "as and
to the extent it wishes." Id. at 803-04. To do
so, Congress must "unequivocally" express that
purpose. Id. at 790 (quoting Santa Clara
Pueblo, 436 U.S. at 58). "The baseline position
[however], [the Supreme Court] [has] often held, is tribal
immunity . . . ." Id. Thus, Indian tribes
possess this "core aspect of sovereignty" unless
and until Congress "unequivocally" expresses a
contrary intent. Id. at 788, 790.
issue in this case is whether Congress unequivocally
expressed such an intent in the Bankruptcy Code of 1978, 11
U.S.C. §§ 106, 101(27). Section 106 provides, in
relevant part, that "[n]ot withstanding an assertion of
sovereign immunity, sovereign immunity is abrogated as to a
governmental unit to the extent set forth
in this section with respect to . . . Sections . . . 544 . .
. [and] 550 . . . of [the Bankruptcy Code]." (emphasis
added). Section 101(27) then provides that:
[t]he term 'governmental unit' means United States;
State; Commonwealth; District; Territory; municipality;
foreign state; department, agency, or instrumentality of the
United States (but not a United States trustee while serving
as a trustee in a case under this title), a State, a
Commonwealth, a District, a Territory, a municipality, or a
foreign state; or other foreign or domestic
(emphasis added). The Trustee asserts that, read together,
these sections constitute an unequivocal expression of
congressional intent to abrogate tribal sovereign immunity.