Penobscot Indian Nation v. Key Bank of Maine

United States Court of Appeals
For the First Circuit

No. 96-1670

PENOBSCOT INDIAN NATION,
Plaintiff, Appellee,

v.

KEY BANK OF MAINE, ET AL.,
Defendants, Appellees,

JOHN PALMER, PALMER MANAGEMENT CORPORATION,
AND PALMER DEVELOPMENT CORPORATION,
Appellants.

No. 96-1671

PENOBSCOT INDIAN NATION,
Plaintiff, Appellant,

v.

KEY BANK OF MAINE, ET AL.,
Defendants, Appellees.

No. 96-1672

PENOBSCOT INDIAN NATION,
Plaintiff, Appellee,

v.

KEY BANK OF MAINE, ET AL.,
Defendants, Appellees.

JOHN SCHIAVI,
Appellant.

No. 96-1736

PENOBSCOT INDIAN NATION,
Plaintiff, Appellee,

v.

KEY BANK OF MAINE,
Defendant, Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

Before

Selya and Stahl, Circuit Judges,
and Woodlock,* District Judge.

ERRATA SHEET

Please make the following changes to the opinion issued on
May 5, 1997:

On page 6, line 9, "May 1988" should read "May 1989"

On page 6, the first full paragraph, lines 9-15, should
be moved in its entirety to become the end of the
paragraph that begins on line 16 (beginning "In April
1989"). Specifically, it should be placed after the
sentence that reads "As part of the liquidation plan,
PIN and Palmer then assigned Schiavi Homes' assets to
Key Bank." It should not form a new paragraph, but,
instead, should form the continuation of the paragraph
that currently is at page 6, lines 16-19. In addition,
footnote marker 2 (currently located after "Key Bank."
on page 6, line 19), should be moved to follow the
sentence that reads "In May 1989, Key Bank notified PIN
that it intended to exercise the purchase option
contained in the Lease-Option Agreement."

On page 17, line 15, replace brackets around
[hereinafter "Indian fee lands"] with parentheses

No. 96-1670

PENOBSCOT INDIAN NATION,
Plaintiff, Appellee,

v.

KEY BANK OF MAINE, ET AL.,
Defendants, Appellees,

JOHN PALMER, PALMER MANAGEMENT CORPORATION,
AND PALMER DEVELOPMENT CORPORATION,
Appellants.

No. 96-1671

PENOBSCOT INDIAN NATION,
Plaintiff, Appellant,

v.

KEY BANK OF MAINE, ET AL.,
Defendants, Appellees.

No. 96-1672

PENOBSCOT INDIAN NATION,
Plaintiff, Appellee,

v.

KEY BANK OF MAINE, ET AL.,
Defendants, Appellees.

JOHN SCHIAVI,
Appellant.

No. 96-1736

PENOBSCOT INDIAN NATION,
Plaintiff, Appellee,

v.

KEY BANK OF MAINE,
Defendant, Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

Before

Selya and Stahl, Circuit Judges,
and Woodlock,* District Judge.

Peter J. Haley, with whom Stephen F. Gordon, Gordon & Wise,
Ronald C. Caron, and Caron & Sullivan,were on brief for appellant
Penobscot Indian Nation and third-party defendants-appellees, Gerald
Pardilla and Reuben Phillips.
Catherine R. Connors, with whom Debra Brown and Pierce Atwood,
were on brief for appellee and cross-appellant Key Bank of Maine.
Justin W. Leary, with whom Leonard I. Sharon and Sharon, Leary &
Detroy, were on brief for appellee Michael Marcello.
Stephen B. Wade
with whom Skelton, Taintor & Abbott was on brief for defendants-
appellees and cross-appellants, John Palmer, Palmer Management Corp.,
and Palmer Development Corp.
Jeffrey A. Thaler with whom Berman & Simmons, P.A. was on brief
for defendant-appellee and cross-appellant, John Schiavi.
Melissa A. Hewey with whom Drummond Woodsum & MacMahon was on
brief for appellees Consumers Water Company, Burlington Homes of New
England, Inc., and SHC Corporation.

May 5, 1997

* Of the District of Massachusetts, sitting by designation.

STAHL, Circuit Judge. Appellant, a federally-

recognized
Indian
tribe,
appeals the district court's denial of

its motion for declaratory judgment, pursuant to 25 U.S.C. S

81, seeking to invalidate several agreements concerning the

purchase and operation of a mobile home business. Appellees

cross appeal the district court's summary judgment ruling in

favor
of
Appellant on several defamation counterclaims as well

as a breach of contract and emotional distress counterclaim

stemming from litigation involving the failure of this same

mobile home business.

Background

Although
the
district
court provided a cogent summary

of the facts and procedural history in its memorandum opinion

below, see Penobscot Indian Nation v. Key Bank, 906 F. Supp.

13,
16-17
(D.
Me.
1995),
the complexity of this case compels us

to sketch the necessary background information.

In 1983, Consumers Water Company ("CWC") acquired

Schiavi Homes Corporation ("SHC"), a profitable Maine mobile

home sales business, from John Schiavi ("Schiavi"). Under

CWC's ownership, SHC continued to operate successfully. In

1985, John Palmer ("Palmer") became SHC's new president. In

August 1985, Palmer and his wife, Mary Anna, also founded

Palmer Development Corporation ("Palmer Development"). Like

SHC, Palmer Development engaged in the sale of mobile homes

throughout Maine.

-3-

In 1985, the Penobscot Indian Nation ("PIN") hired

Tribal Assets Management ("TAM") to locate, evaluate, and

recommend potential investment opportunities. Late in 1986,

TAM
identified SHC as a potential PIN investment and conducted

a
detailed
analysis
of
SHC's viability as a successful business

venture. TAM alerted PIN that SHC constituted a good

investment possibility, but cautioned PIN that the success of

the
venture
would
depend
largely on PIN's willingness to invest

in new mobile home sites on which the mobile homes it sold to

retail customers could be located. PIN expressed its

willingness
to use its lands and invest its resources for such

purposes.

On December 31, 1986, PIN and Palmer Management

Corporation
("Palmer
Management"), a corporation formed for the

purpose of purchasing SHC, executed a Partnership Agreement

creating
Schiavi Homes ("Schiavi Homes" or "the Partnership"),

a Maine limited partnership. Pursuant to the Partnership

Agreement, PIN became the sole limited partner and Palmer

Management the sole general partner.1 PIN acquired a ninety

percent
interest in Schiavi Homes. Palmer Management received

only a ten percent share but secured full control over all

management decisions.

1. Prior to the purchase, TAM informed PIN that Palmer had
been the president of SHC. PIN also knew both that Palmer
and his wife owned Palmer Development and that Palmer
Development engaged in business activities similar to those
of SHC.

-4-
4

Also on December 31, 1986, the Partnership executed

a
Purchase
and Sale Agreement with SHC, which provided for the

Partnership's purchase of SHC's assets and business for

approximately $5 million. Key Bank of Maine ("Key Bank")

financed
the
purchase on the condition that Palmer retain full

management
control over Schiavi Homes. Key Bank also insisted

that
PIN
post a $1 million letter of credit to secure its loan

and agree to restrictions on the withdrawal of funds from

Schiavi Homes.

As part of its purchase of SHC, the Partnership

secured three non-competition agreements. CWC entered into a

non-competition agreement with Schiavi Homes and assigned to

the Partnership its interest in an existing non-competition

agreement with Schiavi, which it obtained at the time it

originally acquired the business. Palmer signed a similar

agreement with the Partnership.

Schiavi Homes fared poorly from its inception.

Although sales of mobile homes in Maine reached an all time

high
during
this
time,
by the end of 1987 Schiavi Homes' market

share had declined from eighteen to eight percent. Over the

course of its three year existence, PIN made several

investments
in
Schiavi
Homes in an attempt to buoy its business

fortunes. Most significantly, in October 1987, PIN signed a

Lease-Option Agreement with Schiavi Homes leasing for the

nominal fee of $1 per year a twenty-four acre tract of real

-5-
5

property
(the
"Holden
Lot") that PIN purchased during this same

onth.

The
Lease-Option
Agreement afforded the Partnership the

option
m to purchase the Holden Lot for $100,000. PIN

subsequently invested approximately $135,000 to develop the

Holden Lot for purposes of the Schiavi Homes business. In

December 1988, with Schiavi Homes unable to make its regular

monthly
loan
payment
of
principal and interest to Key Bank, the

Partnership pledged the Lease-Option Agreement to Key Bank.

In April 1989, acting on the advice of its counsel,

Bernstein,
Shur, Sawyer & Nelson ("Bernstein"), PIN decided to

liquidate
Schiavi Homes. As part of the liquidation plan, PIN

and Palmer then assigned Schiavi Homes' assets to Key Bank.

In
May
1989,
Key
Bank
notified PIN that it intended to exercise

the purchase option contained in the Lease-Option Agreement.2

At
this
time,
Key
Bank
also initiated three foreclosure actions

with respect to real property that the Partnership owned and

encumbered
with
mortgage
deeds given to Key Bank in conjunction

with the initial financing of SHC's purchase.

On September 29, 1989, PIN entered into two

comprehensive
Settlement Agreements with Schiavi, SHC, Schiavi

2.
The Area Director of the Eastern Area Office of the Bureau of
Indian Affairs, George Big Eagle, approved the transfer of
the Holden Lot to Key Bank pursuant to Title IV of the Indian
Financing Act of 1974, 25 U.S.C. SS 1451-1543, which forbids,
without written consent, any transfer or disposal of a
project being improved with federal grant funds within three
years of the use of such funds.

-6-
6

Homes,
Palmer,
Palmer
Management, Key Bank, Burlington Homes of

New England3 ("Burlington Homes"), and CWC (collectively

"Appellees"). PIN, Schiavi Homes, Schiavi, Palmer, Palmer

Management, and Key Bank executed the first Settlement

Agreement ("first Settlement Agreement"); PIN, Schiavi Homes,

SHC, Palmer, Palmer Management, Key Bank, CWC, and Burlington

Homes executed the second Settlement Agreement ("second

Settlement
Agreement").

The two agreements contained identical

language that served broadly to "release, remise and forever

discharge"
all
claims
involving the signatories. Subsequent to

the
signing
of
the
two
Settlement Agreements, legal proceedings

deriving from the operation of Schiavi Homes ceased.

The ensuing period of calm ended on September 14,

1994,
when
PIN
filed
the
lawsuit underlying this appeal. PIN's

suit stemmed from an investigation of Key Bank's activities

relating
to
Schiavi Homes that Penobscot County Deputy Sheriff

Carl Andrews conducted between approximately 1993 and 1994.4

3. Burlington Homes of New England, a subsidiary of CWC,
manufactured mobile homes. SHC, Schiavi Homes, and Palmer
Development all sold homes that Burlington manufactured.

4. The record does not reveal the exact duration, scope, or
findings of the investigation. Andrews testified that he
provided the Maine Attorney General's office with a three
page report summarizing his findings, but he did not divulge
the report's contents to PIN. No party submitted this report
into evidence; in fact, it is not apparent from the record
that the results of the investigation were set out in writing
or were made known to the public. It is clear, however, that
no criminal proceedings of any kind resulted from Andrews'
investigation.

-7-
7

PIN alleges that Andrews' investigation revealed substantial

improprieties on the part of PIN's business associates in the

Schiavi Homes venture. Also on September 14, 1994, PIN held

two press conferences, one in Bangor, Maine, and one in

Portland, Maine, to announce the filing of its lawsuit in

federal district court. Michael Marcello, PIN's media

relations
consultant,
prepared the statements that PIN Governor

Reuben Phillips and PIN Lieutenant Governor Gerald Pardilla

read at the two press conferences. Marcello also distributed

the text of the statements to members of the media.

PIN's
complaint contained nine counts and named nine

defendants. Most importantly for our purposes, the complaint

alleged that the two Settlement Agreements signed by PIN and

the Appellees were void because they did not receive the

Secretary of the Interior's approval pursuant to 25 U.S.C. S

81.5 SHC filed a motion to dismiss PIN's claims. Key Bank,

Schiavi, Palmer, Palmer Development, Palmer Management, CWC,

and Burlington Homes moved for summary judgment.

5. PIN's complaint also alleged the following: (1) breach
of duty of good faith and fair dealing (against Key Bank,
CWC, SHC, Burlington, Schiavi, Palmer, and Palmer
Management); (2) breach of contract (against Schiavi); (3)
misrepresentation (against CWC, SHC, Burlington, Schiavi, and
Palmer); (4) fraud (against Bernstein); (5) negligence
(against Bernstein); (6) breach of fiduciary duty (against
Key Bank, Palmer, and Palmer Management); and (7) RICO
violations (against Key Bank, CWC, Burlington, Bernstein,
Schiavi, Palmer, Palmer Management, and Palmer Development).

-8-
8

Palmer, Palmer Development, Palmer Management (the

"Palmer
Defendants"),
Key Bank, and Schiavi filed counterclaims

against PIN for defamation and punitive damages based on the

alleged defamation stemming from the September 14, 1994 press

conferences. Key Bank filed counterclaims for defamation

against Marcello, Phillips, and Pardilla. Also deriving from

these
press
conferences, Palmer asserted counterclaims against

PIN for intentional and negligent infliction of emotional

distress. Both Palmer and Palmer Management filed

counterclaims
against
PIN for breach of contract, alleging that

PIN's suit violated the release contained in the Settlement

Agreements.

Only Marcello responded with a motion for summary

judgment.

The district court (Brody, J.) concluded that 25

U.S.C. S 81 did not apply to the Settlement Agreements.

Determining that the Settlement Agreements constituted valid

releases, the district court granted summary judgment for the

defendants
with respect to all of PIN's claims. See Penobscot

Indian
Nation,
906
F.
Supp. at 20-21. Treating SHC's motion to

dismiss as a motion for summary judgment, the district court

separately granted summary judgment for SHC based on the

binding
nature
of
the
Settlement Agreements. See id. at 21-22.

The district court also ruled that the statute of limitations

barred PIN's RICO claims. See id. at 21.

-9-
9

The
district
court
then
considered the counterclaims.

Finding that Key Bank did not allege facts demonstrating even

ence on Marcello's part, the district court granted

Marcello's
motion
for
summary judgment on Key Bank's defamation

terclaim.
neglig
coun See id. at 23. Despite the fact that only

Marcello filed a motion for summary judgment, the district

court proceeded to grant summary judgment sua sponte for PIN

and the remaining cross-Appellees with respect to the

defamation
claims.6 See id. Judge Brody also awarded summary

judgment sua sponte for PIN and the other cross-Appellees on

the punitive damage counterclaims. See id. at 24. Finally,

the district court granted PIN's motion for summary judgment

with respect to the emotional distress and breach of contract

claims.

See

Penobscot Indian Nation v. Key Bank, Civ. No. 94-

0212-B (D. Me. Dec. 13, 1995).

In the spring of 1996, PIN's malpractice claims

against Bernstein went to trial before a jury. The jury

returned a verdict in favor of Bernstein. The district court

then entered a final judgment resolving all claims on May 7,

1996. These appeals ensued.7

6. The Palmer Defendants immediately filed a motion for
reconsideration, which the district court subsequently denied
See Penobscot Indian Nation v. Key Bank, Civ. No. 94-0212-B,
1 (D. Me. Dec. 13, 1995).

7. PIN did not appeal the adverse judgment respecting either
its RICO claims or its other claims against Bernstein.
Cross-Appellants did not appeal the district court's sua
sponte ruling as to punitive damages.

-10-
10

Standard of Review

The district court must grant summary judgment if

"the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits . . . show

that
there
is
no
genuine
issue as to any material fact and that

the
moving
party
is
entitled to a judgment as a matter of law."

Fed. R. Civ. P. 56(c). "On appeal from the entry of summary

judgment we review the district court's decision de novo,

construing the record in the light most . . . [favorable] to

the
non-movant and resolving all reasonable inferences in that

party's
favor." Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir.

1996). We are not "wedded to the district court's reasoning.

Rather,
'[w]e are free, on appeal, to affirm a judgment on any

independently sufficient ground.'" Garside v. Osco Drugs,

Inc., 895 F.2d 46, 49 (1st Cir. 1990) (quoting Polyplastics,

Inc. v. Transconex, Inc., 827 F.2d 859, 860-61 (1st Cir.

1987)).

Discussion

This
appeal
raises
several issues which we address in

turn. We begin by resolving an issue of first impression in

this Circuit: whether 25 U.S.C. S 81 applies to agreements

relative
to
lands that an Indian tribe purchases in fee simple

for investment purposes. We then determine whether PIN's

filing
of
this action in 1994 constituted an actionable breach

of contract. Subsequently, we decide whether the district

-11-
11

court
erred
in
concluding that the statements Marcello prepared

and individual PIN officials announced to the press in

September 1994 did not amount to defamation. Thereafter, we

touch upon the issue of whether PIN's conduct at the press

conferences constituted either intentional or negligent

infliction
of
emotional
distress. Finally, we evaluate whether

the
district
court
has
jurisdiction to hear the remaining state

law claims at issue in this case.

A. Section 81

PIN sought a declaratory judgment from the district

court that the agreements it executed with the Appellees

necessitated approval from the Secretary of the Interior

pursuant to 25 U.S.C. S 81. Section 81 states in pertinent

part:

No agreement shall be made by any person
with any tribe of Indians . . . for the
payment or delivery of any money or other
thing of value, in present or in
prospective, or for the granting or
procuring any privilege to him, or any
other person in consideration of services
for
said
Indians relative to their lands .
. . unless such agreement be executed and
approved as follows:

. . . .

It shall bear the approval of the
Secretary of the Interior and the
Commissioner
of Indian Lands indorsed upon
it.
. . . .

All contracts or agreements made in
violation of this section shall be null
and void . . . .

-12-
12

Congress adopted S 81, originally Revised Statute S 2103, in

1872.

To
this day, Congress has not repealed S 81 and the few

amendments
to
its
text
have been only technical. See Altheimer

&
Gray
v.
Sioux
Mfg.
Corp., 983 F.2d 803, 805 (7th Cir. 1993).8

Section 81 dictates that any agreement within its

purview that is not approved by the Secretary of the Interior

("the Secretary") is void ab initio. PIN insists that S 81

applies
not
only to the two Settlement Agreements, but also to

the agreements pertaining to the creation and operation of

Schiavi Homes, specifically the Asset Purchase Agreement, the

Partnership Agreement, and the Lease-Option Agreement. PIN

therefore
reasons that the Settlement Agreements, the Purchase

and Sale Agreement, and the Lease-Option Agreement are not

binding. PIN also contends that the Secretary improperly

determined that S 81 did not apply to the Partnership

Agreement.

Significantly, if the Settlement Agreements are not

valid because they never received the Secretary's approval

pursuant to S 81, PIN may pursue its remaining claims against

the Appellees. If, on the other hand, the Settlement

Agreements do not fall within the parameters of S 81, PIN

8. In addition to technical amendments to S 81, Congress
passed the Indian Gaming Regulatory Act, 25 U.S.C. SS 2701-
2721, which provides in part: "The authority of the
Secretary under section 81 of this title, relating to
management contracts regulated pursuant to this chapter, is
hereby transferred to the [National Indian Gaming]
Commission." 25 U.S.C. S 2711(h).

-13-
13

concedes that its remaining non-S 81 claims fail due to the

binding nature of the Settlement Agreements. We therefore

begin our analysis by evaluating the applicability of S 81 to

the Settlement Agreements.

1. Settlement Agreements

Without
regard
to
S
81,
the two Settlement Agreements

constituted valid releases. Both Settlement Agreements

provided that the parties "release, remise and forever

discharge each other . . . from all suits . . . at law or in

equity
.
.
.
which
directly or indirectly relate[] to . . . any

. . . transactions . . . among each other." Whether or not S

81
pertains
to
and
thus
voids the Settlement Agreements depends

upon whether either or both constitute an agreement with an

Indian tribe for services relative to Indian lands. See 25

U.S.C. S 81.

a. Agreement with an Indian Tribe

The Appellees contend that the Partnership, rather

than
PIN
in
its individual capacity, represents the applicable

entity in this case. This argument is unavailing. PIN's

Lieutenant
Governor signed both Settlement Agreements as PIN's

personal representative, not as the Partnership's Limited

Partner. John Palmer, the Partnership's General Partner,

signed on behalf of Schiavi Homes. Moreover, even if Schiavi

Homes, not PIN in its individual capacity, signed the

agreements, the district court's observation that "[c]ourts

-14-
14

look beyond the mere formality of corporate structure in

construing the identity of parties with regard to S 81,"

Penobscot, 906 F. Supp. at 19, necessitates no elaboration on

our
part.

Se
e Altheimer & Gray, 983 F.2d at 809-10; Pueblo of

Santa Ana v. Hodel, 663 F. Supp. 1300, 1306 (D.D.C. 1987).

b. Services

The district court ruled that "the Settlement

Agreements
themselves
do
not constitute contracts for services.

The Settlement Agreements rather pertain to the release of

legal claims . . . ." Penobscot, 906 F. Supp. at 20. This

conclusion aptly describes the first Settlement Agreement,

which made no reference to any service to be performed by any

party to the Agreement for any other party to the Agreement.

The first Settlement Agreement, consequently, did not involve

services.

The
second
Settlement Agreement contains a provision

obligating
Key
Bank
to
"jointly [with PIN] seek a purchaser for

the Holden Lot9 . . . at a price to be mutually agreed upon."

Because
the
Supreme Court has instructed that federal statutes

concerning
Indian tribes must be construed "liberally in favor

of the Indians," Montana v. Blackfeet Tribe of Indians, 471

U.S. 759, 766 (1985), we assume for purposes of this opinion

9. At oral argument, PIN informed us that the Holden Lot
constitutes the sole tract of land at issue in this case,
and, thus, the only piece of Indian land to which S 81 could
apply.

-15-
15

that
this
provision
in
the second Settlement Agreement entailed

a
"service"
within the meaning of S 81, see Green v. Menominee

Tribe, 233 U.S. 558, 569 (1914) (finding S 81 applicable to

sales contract); see also Wisconsin Winnebago Bus. Comm. v.

Koberstein
,
762
F.2d
613, 619 (7th Cir. 1985) (applying S 81 to

management contract); United States ex rel. Citizen Band

Potawatomi Indian Tribe v. Enterprise Management Consultants,

Inc.
,
734
F.
Supp. 455, 457 (W.D. Okla. 1990) (same), aff'd in

part and rev'd in part, 968 F.2d 22 (10th Cir. 1992); but see

United States ex rel. Harlan v. Bacon, 21 F.3d 209, 211 (8th

Cir. 1994) (determining that lease agreement which provided

that
forty
percent of produce deriving from use of leased land

be
delivered
to tribe did not entail service within meaning of

S 81).

c. Relative to Indian lands

The final prong of the S 81 analysis, whether the

Settlement Agreements were "relative to [Indian] lands,"

presents a more difficult question. The first Settlement

Agreement is not relative to Indian lands because it neither

pertained nor referred to any land whatsoever. The second

Settlement Agreement, however, both involved and referred to

land that an Indian tribe owned. Specifically, the second

Settlement
Agreement
provided for the disposition of the Holden

Lot. At first glance, S 81 may appear to apply to the Holden

Lot because PIN, an Indian tribe, owned this parcel of land.

-16-
16

We believe, however, that the meaning of S 81's language, the

intentions of its drafters, the Interior Secretary'

of S 81, the case law from o-determinatio

e statute does not apply to the Holden
s
interpretation n
support
a
holding
that
th

Lot. Although we have uncovered no precedent that explicitly

considers whether or not S 81 applies to land that an Indian

tribe
purchased
in
fee
simple for investment purposes, in doing

so now we give voice to an assumption underlying virtually

every
decision addressing the applicability of S 81 to service

agreements with Indian tribes relative to their lands.

We
base
our
conclusion primarily on the distinctions

between
Indian
trust
or
tribal lands (hereinafter "Indian trust

lands")10 and lands that Indian tribes hold in fee simple

(hereinafter "Indian fee lands"). The phrase "Indian trust

lands" derives from the historic trust relationship existing

between Indian tribes and the federal government, originally

described as "resembl[ing] that of a ward to his guardian."

Worcester v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831); see also

Oneida County v. Oneida Indian Nation, 470 U.S. 226, 247

10. We use the terms "Indian trust lands" and "Indian tribal
lands" interchangeably because we have not located any
authority that draws a distinction between these terms that
is material for our purposes. See, e.g., Black's Law
Dictionary 772 (1990); Felix S. Cohen's Handbook of Federal
Indian Law 35-36, 476 (Rennard Strickland et al. eds., 1982);
Reid P. Chambers & Monroe E. Price, Regulating Sovereignty:
Secretarial Discretion and the Leasing of Indian Lands, 26
Stan. L. Rev. 1061, 1061 (1974) (referring to Indian lands
delineated "restricted" in 25 U.S.C. S 415 as "Indian trust
land").

-17-
17

(1985);
United
States

v.
Sam Pelican, 232 U.S. 442, 447 (1914);

Joint
Tribal
Council of the Passamaquoddy Tribe v. Morton, 528

F.2d 370, 379 (1st Cir. 1975). Indian trust lands constitute

real property the title to which the United States holds in

trust for an Indian tribe. See 25 U.S.C. S 465; Felix S.

Cohen's
Handbook of Federal Indian Law 476 (Rennard Strickland

et al. eds., 1982) [hereinafter Cohen's Handbook].

Fee simple lands, by contrast, are those lands in

which the owner "is entitled to the entire property, with

unconditional power of disposition." Black's Law Dictionary

615
(6th
ed.
1990). Federal law recognizes that Indian tribes

may hold certain lands in fee simple and that these lands may

not
be
subject to the trust relationship between Indian tribes

and the federal government. See, e.g., 25 U.S.C. S 1466.

Specifically,
and pertinent to these appeals, the Maine Indian

Claims Settlement Act, 25 U.S.C. SS 1721-1735, indicates that

the Holden Lot constitutes Indian fee land over which the

federal
government
does
not have a trust responsibility because

the
Lot
does
not
lie
within designated PIN Territory. In fact,

Congress expressly disavowed trust responsibility for Indian

real
property encompassing the area in which the Holden Lot is

situated.
11

Accordingly, we find that PIN held the Holden Lot

11. 25 U.S.C. S 1724(d)(3) provides: "Land or natural
resources acquired outside the boundaries of [Penobscot
Indian Territory] . . . shall be held in fee by the
respective tribe or nation, and the United States shall have
no further trust responsibility with respect thereto." 25

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18

in fee simple. We now consider the impact this fact has on

whether S 81 applies to the second Settlement Agreement.

This
inquiry
necessitates that we first consider the

statute's text. See United States v. Gonzales, 117 S. Ct.

1032, 1034 (1997). As previously noted, S 81 states: "No

agreement
shall
be
made
by any person with any tribe of Indians

. . . for the payment or delivery of any money or other thing

of
value,
in
present or in prospective, or for the granting or

procuring any privilege to him, or any other person in

consideration of services for said Indians relative to their

lands
.
.
.
."

The
statute does not distinguish between Indian

trust lands and Indian fee lands; nor does it refer to all

Indian lands. In fact, S 81's scope is not clearly defined.

See Mark A. Jarboe, Fundamental Legal Principles Affecting

Business Transactions in Indian Country, 17 Harmline L. Rev.

417, 430 (1994); see also Stowell v. Secretary of Health and

Human Servs., 3 F.3d 539, 542 (1st Cir. 1993) ("Given two

plausible alternatives, and recognizing that the universe of

interpretive
possibilitie
s may extend beyond them, we think the

U.S.C. S 1722(j) defines Penobscot Indian Territory as "those
lands as defined in the Maine Implementing Act." The Maine
Implementing Act defines Penobscot Indian Territory as the
Penobscot Indian Reservation and "[t]he first 150,000 acres
of land acquired by the secretary for the benefit of the
Penobscot Nation" as further defined in this section. Me.
Rev. Stat. Ann. tit. 30, S 6205(2)(B) (1993). The Holden Lot
does not fall within either the Penobscot Indian Reservation
or the remaining area that S 6205(2)(B) designed as current
or potential Penobscot Indian Territory.

-19-
19

statute contains an undeniable ambiguity.").

Section 81's lack of clarity and its failure t

Smith
o
define the phrase "Indian lands" requires us to determine the
"ordinary or natural" meaning of these terms. See v.

United States, 508 U.S. 223, 228 (1993). When Congress has

failed to define statutory language, the Supreme Court has

resorted to authoritative texts to determine the ordinary

meaning of statutory language. See id. at 229. According to

one such text, the term "Indian lands" refers to "[r]eal

property ceded to the U.S. by Indians, commonly to be held in

trust
for
Indians."

Blac
k's Law Dictionary 771 (6th ed. 1990).

The definition of Indian tribal or trust land is virtually

identical: "real propt 772.12

In the context of S 81, the phrase "relative to

[Indian] lands" is understood to refer to Indian trust lands.

See Cohen's Handbook at 318 n.293 (explaining that "25 U.S.C.

S 81[] prohibit[s] contracts with Indian tribes concerning

trust property unless approved by the Commissioner of Indian

affairs") (emphasis added); Patrick K. Duffy and Lois A.

12. It is noteworthy that the phrase "Indian country" refers
to "all lands set aside by whatever means for the residence
of tribal Indians under federal protection, together with
trust and restricted Indian allotments." Cohen's Handbook at
34; see also United States v. John, 437 U.S. 634, 648-50
(1978). The phrase "as Indian lands are held" is read
"simply to state the United States will hold title in trust
for the tribe." Cohen's Handbook at 476. These definitions
would seem to indicate that "Indian country" and "Indian
lands" encompass Indian trust lands but not Indian fee lands.

-20-
20

Lofgren, Jurassic Farce: A Critical Analysis of the

Government's Seizure of "Sue," A Sixty-Five-Million-Year-Old

Tyrannosaurs
Rex
Fossil,
39 S. D. L. Rev. 478, 528 n.169 (1994)

(indicating
that
pursuant to S 81, the Secretary "has oversight

responsibility for approving or vetoing the terms and

conditions
of
all
contracts involving Native American tribal or

trust property") (emphasis added). No authority directly

states that S 81 applies to Indian fee lands. It is

understood,
however,
that by adopting S 81 "Congress prohibited

most contracts between non-Indians and tribes . . . unless

approved
by
the Secretary of the Interior and the Commissioner

of Indian Affairs." Cohen's Handbook at 143. Thus, although

it appears that S 81's "relative to [Indian] lands" language

connotes Indian trust lands rather than Indian fee lands, we

acknowledge that this interpretation is not iron-clad.

Recognizing that we cannot end our inquiry with the

"ordinary" or "natural" meaning of the statute's terms, we

consider
the
relevant legislative history in an effort to give

effect to the intentions of the statute's drafters. See

Griffin

v.
Oceanic
Contra
ctors, Inc., 458 U.S. 564, 571 (1982);

United States ex rel. S. Prawer & Co. v. Fleet Bank, 24 F.3d

320, 327 (1st Cir. 1994); Federal Election Comm'n v.

Massachusetts Citizens for Life, Inc., 769 F.2d 13, 17 (1st

Cir. 1985), aff'd, 479 U.S. 238 (1986). This inquiry is

particularly
appropriate in the context of federal Indian law.

-21-
21

The Supreme Court has made it clear that "Indian law[] cannot

be interpreted in isolation but must be read in light of the

common notions of the day and the assumptions of those who

drafted [such law]." Oliphant v. Suquamish Indian Tribe, 435

U.S.
191,
206
(1978);
see
also Central Machinery Co. v. Arizona

State Tax Comm'n, 448 U.S. 160, 166 (1980) (explaining that

courts must "interpret [certain federal statutes involving

Indian tribes] . . . in light of the Congress that enacted

them").

Congress
"intended
[S
81] to protect the Indians from

improvident
and unconscionable contracts." In re Sanborn, 148

U.S. 222, 227 (1893); see also Cong. Globe, 41st Cong., 3d

Sess. 1483, 1483 (daily ed. Feb. 22, 1871) (declaring that

statute was for Indians' "protection and to prevent them from

being plundered") (comments of Senator Davis). Specifically,

Congress adopted S 81 to protect Indian tribes and individual

Indians
from
persons,
particularly attorneys and claims agents,

offering dubious services, typically the assertion of the

Indians' land claims against the government, in exchange for

enormous fees. See Cong. Globe, 41st Cong. at 1483-86. One

senator indicated that this section "would prevent . . .

contracts
being made by [Indian tribes] unless approved by the

Secretary
of
the
Interior in any matter relating to the land or

annuities that they hold under or derive from the United

States." See Cong. Globe, 41st Cong. at 1486 (comments of

-22-
22

Senator Harlan) (emphasis added). Another senator declared

that S 81 "is limited to such agreements or services as are

made
or
rendered
relative to the lands of the Indians or to any

claim against annuities from or treaties with the United

States."

Id.
(comments of Senator Casserly) (emphasis added).

Evidence
of
the drafters' assumptions and intentions

does little to resolve whether or not the phrase "relative to

[Indian] lands" pertains to both Indian trust land and Indian

fee lands, or solely to the former. The two statements

addressing the application of S 81 may be read differently:

Senator Harlan's description may indicate that the statute

applies solely to lands over which the federal government

exercises a trust responsibility; Senator Casserly's

explanation may mean that the statute applies to Indian lands

generally.

To reconcile this ambiguity, and thus to parse the

ordinary meaning of S 81 at the time of its ratification, we

consider the understanding of the status of Indian lands that

prevailed at the time Congress passed S 81.13 See Oliphant,

13. Our determination to further consider the nature of
Indian land ownership during this time in order to properly
interpret the phrase "relative to [Indian] lands" would be
appropriate even if we read Senator Harlan's statement in the
disjunctive, rather than in the conjunctive as the sentence
was recorded. That is, if we read the phrase "relating to
the land or annuities that they hold under or derive from the
United States" so that the qualifying statement "that they
hold under or derive from the United States" qualifies only
the word "annuities" but not the words "the land," we still
would have learned little more concerning the definition of
"Indian lands." Such a reading, though tortured, would
resolve the ambiguity between the drafters' two statements

-23-
23

435 U.S. at 206.

In 1872, when Congress passed S 81, federal law

provided that Indian tribes enjoyed the right to possess and

occupy lands but not to alienate these lands without the

federal government's approval. See Johnson v. M'Intosh, 21

U.S.
(8
Wheat.) 543, 574 (1823) (indicating that United States

possessed
title
to
all
Indian lands "subject only to the Indian

right
of
occupancy");
Uni
ted States v. Cook, 86 U.S. (19 Wall.)

591,
592-94
(1873) (explaining that Indians enjoyed only right

of occupancy in Indian lands and that "the fee was in the

United States"); David H. Getches and Charles F. Wilkinson,

Federal Indian Law 161 (1986) ("The United States had the

exclusive right to purchase or extinguish Indian title.")

[hereinafter Federal Indian Law]. Memorializing this

conception of Indian real property rights, Congress adopted

general, comprehensive legislation addressing the rights of

Indian tribes with respect to their lands during this era.

See
,
e.g.
,
Nonintercourse
Act of 1834, R.S. S 2116 (codified as

25
U.S.C.
S
177)
(prohibiting "purchase, grant, lease, or other

conveyance
of
lands
,
or
of any title or claim thereto, from any

Indian nation or tribe of Indians") (emphasis added).14

and would tend to point to a broader definition of the terms
"Indian lands," but it would not dispose of our inquiry into
the meaning of the phrase "relative to [Indian] lands."

14. It was not until the legal relationship between Indian
tribes and the federal government evolved dramatically in the
twentieth century that legislation regulating Indian tribes'

-24-
24

Congress did not distinguish between Indian trust lands and

Indian fee lands at this time presumably because it did not

contemplate that Indian tribes could hold land in fee simple.

During this time, however, Congress did provide for

individual Indians to hold land in fee simple. See 25 U.S.C.

SS 348-349 (1887). The allotment process that these statutes

authorized permitted the Secretary to transfer certain real

property to individual Indians. Typically, the United States

would hold such lands in trust for the designated individuals

for a period of twenty-five years. See Sam Pelican, 232 U.S.

at 447. The Secretary, at his discretion, could "cause to be

issued
to
such allottee a patent in fee simple, and thereafter

all restrictions as to sale, incumbrance, or taxation of said

land shall be removed." 25 U.S.C. S 349. Despite these

statutes' provision for individual Indians' fee simple

ownership of real property, we have unearthed no legislation

real property routinely distinguished between restricted and
unrestricted tribal lands. See, e.g., 28 U.S.C. S 1360(b)
(1953) (referring specifically to the "alienation,
encumbrance, or taxation of any real or personal property . .
. that is held in trust by the United States or is subject to
a restriction against alienation imposed by the United
States"); 25 U.S.C. S 415 (1955) (referring specifically to
"restricted Indian lands"). Modern statutes routinely
distinguish between Indian trust lands and Indian fee lands.
See, e.g., 25 U.S.C. S 1724(d)(3) (1980) (distinguishing
between Indian trust lands and Indian fee lands, and
indicating that the United States does not have "trust
responsibility" with respect to the latter); 25 U.S.C. S 1466
(1974) (indicating that Indian tribes can purchase real
property "without any restriction on alienation, control, or
use").

-25-
25

enacted
during
this
time
that afforded similar rights to Indian

tribes. See Cohen's Handbook at 36 & n.78.

Interpreting S 81 and its legislative history in

light of the understandings and assumptions of those who

drafted it, see Oliphant, 435 U.S. at 206, thus supports the

conclusion
that S 81 does not pertain to the Holden Lot. When

Congress passed S 81 it did not envision that Indian tribes

could hold land in the manner that PIN held the Holden Lot.

Cf. Cohen's Handbook at 127-43 (concluding that during this

time
"extensive government supervisory power over the everyday

life of Indians was essentially unchecked"). It therefore

would seem anomalous, in endeavoring to give effect to

Congress' intent, to apply S 81 to lands PIN purchased in fee

simple for investment purposes.

Admittedly, the broad remedial purposes that S 81's

drafters attributed to the statute may complicate this

analysis. Congress desired to protect Indian tribes from

unscrupulous
business practices, see Cong. Globe 41st Cong. at

1485-86, and enjoyed the sole right to encumber all Indian

lands, see Oneida Indian Nation v. County of Oneida, 414 U.S.

661,
667
(1974) ("Once the United States was organized and the

Constitution
adopted
.
.
. tribal rights to Indian lands became

the exclusive province of the federal law. Indian title,

recognized
to be only a right of occupancy, was extinguishable

only by the United States."). It may seem plausible,

-26-
26

therefore, that S 81 should apply to agreements for services

relative
to
all
Indian
lands. Congress, moreover, occasionally

did
authorize individual Indians to hold designated parcels of

real property in fee simple, and, therefore, could have

exempted these fee simple lands from S 81's purview if it did

not
want
S
81 to apply to Indian fee lands. To our knowledge,

Congress has adopted no such exemption. Our analysis thus

illustrates that although S 81's legislative history,

considered
in light of the status of federal Indian law during

the
middle
of the nineteenth century, points to the conclusion

that S 81 does not apply to Indian fee lands, it does not

provide a clear answer to the issue we face today.

Having
failed
to
arrive
at a definitive answer to our

inquiry through reference to S 81's plain meaning and

legislative history, we turn to analyze the interpretation of

the agency responsible for administering the statute. See

Chevron U.S.A., Inc. v. Natural Resources Defense Council,

Inc.
,
467
U.S.
837,
843
(1984). Although we have not unearthed

a general interpretation of S 81 advanced by the Secretary of

the Interior, in this case the parties submitted the

Partnership Agreement for the Secretary's approval. The Area

-27-
27

Director of the Eastern Area Office of the Bureau of India

stated:
n
Affairs15

The Secretary has determined that the
Agreement does not encumber trust land or
other trust assets, that the Agreement is
not
subject
to the provisions of 25 U.S.C.
S 81 (1982), and that, as a result, the
Nation has contractual capacity to enter
into this Agreement without additional
Secretarial approval.

Declaration of B. D. Ott, Area Director, Eastern Area Office,

Bureau of Indian Affairs (December 31, 1986).

This declaration illustrates that in determining

whether or not an agreement with an Indian tribe falls within

the
parameters
of
S
81,
the Secretary focuses on whether or not

the agreement relates to Indian trust lands or assets. See

also B arona Group of the Capitan Grande Bande of Mission

Indians v. American Management & Amusement, Inc., 840 F.2d

1394, 1404-05 (9th Cir. 1987) (quoting Acting Superintendent

for Southern California Bureau of Indian Affairs office

explaining that S 81 does not apply if "trust lands and funds

are not involved"). In this case, the second Settlement

Agreement did not involve Indian trust lands or assets.

Although the administrative agency's interpretation does not

15. The Secretary of the Interior's duties pursuant to the
text of S 81 subsequently have been delegated to the
appropriate Area Director of the Bureau of Indian Affairs.
See Reorganization Plan No. 3 of 1950, 5 U.S.C. S 903(a)(5) &
note; Order of the Secretary of the Interior, Nos. 3150 &
3177, Amend. No. 3 (Dec. 16, 1996); 10 B.I.A.M. Bulletins 13,
9409, & 9602.

-28-
28

function
to
conclusively
resolve our evaluation of whether S 81

pertains to the second Settlement Agreement, see Stowell, 3

F.3d at 544; American Management, 840 F.2d at 1405, we must

afford
it
considerable deference, see Chevron U.S.A., 467 U.S.

at 843; Strickland v. Commissioner, Maine Dep't of Human

Servs., 96 F.3d 542, 547 (1st Cir. 1996).

Judicial interpretation of S 81 provides further

guidance.

See

Securities
Indus. Ass'n v. Board of Governors of

Fed. Reserve Sys., 839 F.2d 47, 49 (2d Cir. 1988) (explaining

that in determining reasonableness of administrative agency's

interpretation of statute, court should consider judicial

construction)
. Courts generally have focused on the existence

of
Indian
trust
land
in
evaluating S 81's "relative to [Indian]

lands"
component. In Koberstein, 762 F.2d at 619, the Seventh

Circuit explicitly stated that S 81 applied to a bingo

management agreement because "S 81 applies to Indian land

transactions
concerning
their tribal trust property." (emphasis

added). See also Pueblo of Santa Ana, 663 F. Supp. at 1306

(finding S 81 applicable to agreement because it provided for

construction and operation of facility on "tribal trust

property") (emphasis added); Enterprise Management, 734 F.

Supp.
at
457
(voiding
bingo management agreement providing non-

Indian party exclusive right to operate bingo games on Indian

trust lands because this agreement was "relative to Indian

lands and . . . thus governed by section 81").

-29-
29

The Ninth Circuit in particular has manifested the

importance
that
the
presence of Indian trust lands plays in the

"relative
to
[Indian] lands" analysis. In A.K. Management Co.

v. San Manuel Band of Mission Indians, 789 F.2d 785, 786 (9th

Cir. 1986), the Ninth Circuit considered the applicability of

S
81
to
a
bingo
management contract that the San Manuel Band of

Mission Indians executed with a bingo management company.

Upholding the district court's grant of summary judgment, the

court
held
"that
the
instant Agreement is 'relative to [Indian]

lands' under 25 U.S.C. S 81." Id. at 787. In reaching this

conclusion, the court reasoned that "the Agreement gives the

non-Indian contracting party . . . the express right to build

and control the operation of the bingo facility located on

tribal
trust
lands and prohibits the Band from encumbering the

land." Id. (emphasis added).

One year later, in American Management, 840 F.2d at

1404, the Ninth Circuit again determined that a contract

between an Indian tribe and a non-Indian bingo management

company
providing
for
the construction and operation of a bingo

facility on Indian trust lands was "'relative to [Indian]

lands' under section 81." The court specifically stated that

it
reached
this conclusion despite the fact that the agreement

neither afforded the non-Indian party exclusive control over

the
bingo
facility
nor
abridged the tribe's ability to encumber

its trust lands. See id. The fact that the non-Indian party

-30-
30

exercised some control over Indian trust lands, however

minimal, proved decisive to the American Management court's

analysis.

See

id.
;
see

a
lso United States ex rel Yellowtail v.

Little Horn State Bank, 828 F. Supp. 780, 787 (D. Mont. 1992)

("The only interest the government has in overseeing certain

contracts and agreements with Indians flows from its duty as

trustee of tribal resources. . . . The nature of the

government's interest is in the Tribe's trust resources

'relative
to
the
land.'"), aff'd, 15 F.3d 1095 (9th Cir. 1994).

The most recent circuit court decision to

specifically
address
the
"relative to [Indian] lands" component

of S 81, Altheimer & Gray, 983 F.2d at 808-12, offers a

slightly different construct that further supports the

conclusion
that
the
second Settlement Agreement in this case is

not "relative to [Indian] lands." The Altheimer court

considered a Letter of Intent that a federally recognized

Indian
tribe,
in
the
form of a wholly owned tribal corporation,

executed with an Illinois corporation providing for the

manufacture of latex medical products on tribal trust lands.

See id . at 806-07. Although manufacture of the products

actually
commenced,
the
parties failed to execute the necessary

contracts.

Operations thus ceased shortly after commencement.

The
Illinois
corporation
sued the tribal corporation for breach

of contract. The district court found the Letter of Intent

void pursuant to S 81 and granted summary judgment to the

-31-
31

tribal corporation. See id. at 806-07.

The
Seventh
Circuit
reversed the district court. See

id
.
at
815.

In
so
doing, the court set forth four factors that

it considered determinative of whether or not a management

contract is "relative to [Indian] lands" pursuant to S 81:

1) Does the contract relate to the management
of a facility to be located on Indian lands?
2) If so, does the non-Indian party have the
exclusive right to operate that facility?
3) Are the Indians forbidden from encumbering
the property? 4) Does the operation of the
facility depend on the legal status of an Indian
tribe being a separate sovereign?

Id. at 811. Despite the fact that the Letter of Intent

involved
the
operation
of a facility on Indian trust lands, the

Altheimer

court found that it was not relative to Indian lands

and thus not within the purview of S 81. The Seventh Circuit

emphasized the fact that the non-Indian contracting party did

not have exclusive control of the facility and that "the

business derived no special benefit from its location on

Reservation land." Id. at 812.

Considering the present case in light of Altheimer

compels
two
initial
observations. First, the second Settlement

Agreement obviously did not constitute a management contract.

Second, importing the precise considerations pertinent to an

evaluation of a management contract to an analysis of an

agreement to assist in locating a purchaser for land may

present
certain difficulties. See id. at 811 (indicating that

-32-
32

the
four
factors that it set forth "are not the 'sine qua non'

of a contract which relates to Indian lands").

Despite
its
distinguishing characteristics, however,

Altheimer

informs our analysis of PIN's appeal. Specifically,

the
Altheimer
court refused to find the agreement "relative to

[Indian] lands" in part because the Indian tribe in Altheimer

remained
involved in the business relationship. In this case,

PIN participated in the Partnership, not through daily

management
duties,
but
through financing and leasing activities

promoting Schiavi Homes' business activities. More

importantly, Altheimer emphasized the fact that the subject

matter of the contract derived no special benefit from the

Indian tribe's sovereign status. See id. at 812. The

Altheimer court explained: "Unlike bingo, manufacturers of

latex medical products need not seek refuge from state civil

laws by locating on a reservation." Id. In this case, the

parties to the second Settlement Agreement derived no special

benefit from PIN's sovereign status.16

Notwithstanding the fact that Altheimer, like the

other cases we have considered, supports the conclusion that

16. We note that when the land at issue constitutes Indian
fee land it is difficult for the subject matter of the
contract to derive a special benefit from the Indian tribe's
sovereignty because Indian tribes do not have the same powers
and privileges with respect to Indian fee lands that they do
in the context of Indian trust lands. See Narragansett
Indian Tribe v. RIBO, Inc., 686 F. Supp. 48, 50 (D.R.I.
1988), aff'd on other grounds, 868 F.2d 5 (1st Cir. 1989);
Cohen's Handbook at 232-57.

-33-
33

the second Settlement Agreement does not fall within the

purview of S 81, we consider one additional case in which the

district court for the district of Rhode Island interpreted S

81's "relative to [Indian] lands" requirement. See

Narragansett Indian Tribe v. RIBO, Inc., 686 F. Supp. 48, 51

(D.R.I. 1988), aff'd on other grounds, 868 F.2d 5 (1st Cir.

1989).

The
N
arragansett court considered S 81's applicability

to
two
management agreements "contemplating acquisition by the

Tribe of property on which a high stakes bingo hall could be

constructed." See id. at 49. Following execution of the

agreements, the Tribe purchased a total of 28.8 acres of land

adjacent to the Tribe's reservation. See id. at 50. The

Tribe, however, failed to secure trust status for this land.

See id.

The
Narragans
ett defendants specifically argued that

"S 81 pertained only to 'tribal land' . . . [that is,] land

that is part of the Tribe's reservation." Id. The district

court rejected this argument, reasoning:

[S]uch a construction proves to be at
variance with both the plain language of
the statute and with its broad remedial
purpose. Thus the statute uses the term
'their [the Indians'] lands' without
differentiating between original tribal
lands and those subsequently acquired.
Reading into those words the limitation
urged by Defendants would distort their
plain meaning. Moreover, it also would
emasculate the statute and frustrate its
purpose of providing a mechanism to
regulate Indian land transactions.

-34-
34

Id.

Although the Narragansett court recognized that S 81 "has

its origin in the longstanding trust relationship between the

federal
government and Indian tribes," id. at 50, it held that

"S 81 renders both the agreements and the notes and mortgages

given by the Tribe in accordance with their terms null and

void." Id. at 51.

We find the Narragansett court's reasoning

unpersuasive. The construction that the Narragansett

defendants advanced, we believe, comports with the plain

language of the statute. If S 81 is predicated on the trust

relationship between the federal government and the Indian

tribes, see id.; United States ex rel. Hall v. Tribal Dev.

Corp.
,
49
F.3d
1208,
1214 (7th Cir. 1995), then reading S 81 to

apply to Indian lands purchased in fee simple for business

reasons contradicts the statute's purpose and its drafters'

intentions. Even those courts that have propounded a broad

reading of S 81's "relative to [Indian] lands" component,

moreover,
have not found that this phrase refers to Indian fee

lands. See, e.g., Koberstein, 762 F.2d at 619; United States

ex rel Shakopee v. Pan American Mgmt. Co., 616 F. Supp. 1200,

1217-18 (D. Minn. 1985) (finding that "the management

agreements [were] . . . inextricably tied up in the property

rights flowing from the establishment of the bingo operations

on
tribal
trust
lands")
(emphasis added). We thus find that to

the extent Narragansett can be read to hold that Indian fee

-35-
35

lands purchased for investment purposes and not designated as

trust
lands
qualify as "Indian lands" under S 81, that holding

is not compelling.

To
reach
a
different
conclusion in the context of the

Holden Lot would defy common sense. See United States v.

Carroll, 105 F.3d 740, 744 (1st Cir. 1997) (instructing that

common sense construction that "avoid[s] absurd or counter-

intuitive results" is favored); O'Connell v. Shalala, 79 F.3d

170,
176
(1st Cir. 1996) (explaining that "courts are bound to

afford statutes a practical, common-sense reading"). Were we

to hold that the second Settlement Agreement required the

pproval pursuant to S 81 despite the fact that it
17
Secretary's
a

relates only to Indian fee lands purchased for business

reasons, we would force the Secretary to exercise a trust

responsibility with respect to lands over which Congress

specifically
disavowed any further trust obligation.18 See 25

17. Perhaps recognizing the Narragansett decision as an
anomaly, at least one circuit court has interpreted
Narragansett as "simply hold[ing] that bingo management
agreements involve services within the meaning of [S 81]."
Bacon, 21 F.3d at 212.

18. We recognize that the Supreme Court determined that the
Nonintercourse Act, 25 U.S.C. S 177, applied to land that the
Pueblo Indian tribes of New Mexico held in fee simple. See
United States v. Candelaria, 271 U.S. 432, 440-44 (1926); see
also United States v. Sandoval, 231 U.S. 28, 45-48 (1913)
(finding that Congress could restrict the alienation of land
that New Mexico Pueblo Indians held in fee simple). The
Pueblo Indians at issue in Candelaria and Sandoval held their
lands in fee simple under both Spanish and Mexican law before
the United States gained control over New Mexico. See
Candelaria, 271 U.S. at 442; Sandoval, 231 U.S. at 44-45.

-36-
36

U.S.C. S 1724(d)(3); 25 U.S.C. 1722(j); Me. Rev. Stat. Ann.

lands.
tit. 30, S 6205(2)(B) (1993).
In the Maine Indian Claims Settlement Act, Congress
not only disavowed further trust responsibility over the area
First the Spanish and then the Mexican authorities, however,
Candelaria Sandoval, 231 U.S.
at 44-45. We believe that the situation in this case, in
which PIN purchased land in fee simple for investment
Candelaria
See
retained the authority to restrict the alienation of these
, 271 U.S. at 442;
purposes, differs substantially from that in both
and Sandoval, in which the tribes held their ancestral tribal
lands in a modified version of fee simple under Spanish and
Mexican rule. We note, however, that several courts,
relying on Candelaria and Sandoval, have found S 177
applicable to lands that other Indian tribes have purchased
in fee simple. See Alonzo v. United States, 249 F.2d 189,
196 (10th Cir. 1957); United States v. 7,405.3 Acres of Land,
97 F.2d 417, 422 (4th Cir. 1938). Given Alonzo's paucity of
analysis and outdated paternalism (the court adopted the
notion that Indians are "'a simple, uninformed people, ill-
prepared to cope with the intelligence and greed of other
races,'" see id. (quoting Candelaria, 271 U.S. at 442)), we
do not find this decision persuasive. This conclusion
applies equally to 7,405.3 Acres of Land.
The situation in this case, moreover, differs
substantially from that in Alonzo and 7,405.3 Acres of Land.
As opposed to the land in question in those cases, Congress
disavowed trust responsibility over the land encompassing the
Holden Lot. See 25 U.S.C. S 1724(d)(3). In Lummi Indian
Tribe v. Whatcom County, 5 F.3d 1355, 1359 (9th Cir. 1993),
the Ninth Circuit took issue with Alonzo and 7,405.3 Acres of
Land and ruled that "parcels of land approved for alienation
by the federal government and then reacquired by the Tribe
did not then become inalienable by operation of the
Nonintercourse Act." See also Federal Power Comm'n v.
Tuscarora Indian Nation, 362 U.S. 99, 110-15 (1960)
(determining that lands that Indian tribe purchased in fee
simple were not subject to federal oversight pursuant to
Federal Power Act, 16 U.S.C. S 797(e), because United States
neither owned these lands nor owned an interest in these
lands). The lands at issue in Lummi Indian Nation and
Tuscarora Indian Nation were similar to the Holden Lot in
that the tribes purchased these lands in fee simple. See
Lummi Indian Tribe, 5 F.3d at 1357; Tuscarora Indian Nation,
362 U.S. at 105-06.

-37-
37

encompassing the Holden Lot, it expressly stated that the

p

as its source the Nonintercourse Act, meaning that th

trust relationship pertains to land transactions which are or

Passamaquoddy Tribe
N
See 25 U.S.C. S 1724(g)(1). This is significant because we
reviously
have indicated that "the 'trust relationship' . . .
has e
may be covered by the Act." , 528 F.2d at

379.

Because
the
Nonintercourse Act no longer pertains to PIN,

Passamaquoddy Tribe dictates that the federal government does

not have a trust obligation with respect to the Holden Lot.

See Imposing such
onintercours
e Act, 25 U.S.C. S 177, no longer applied to PIN.

also 25 U.S.C. S 1724(d)(3).19 a

responsibility pursuant to S 81 would defy not only common

19. Key Bank urges us to rule that the Maine Indian Claims
Settlement Act, 25 U.S.C. SS 1721-1735, implicitly repealed S
81 with respect to PIN generally. Although S 1724 provides
that several statutes, including 25 U.S.C. S 177, no longer
apply to PIN, it makes no mention of S 81. If Congress
desired to repeal completely S 81 with respect to all PIN
real property it could easily have done so, as it did with S
177. Cf. Bailey v. United States, 116 S. Ct. 501, 507 (1995)
(specifying that if Congress desired to alter a statute it
specifically would have done so); Russello v. United States,
464 U.S. 16, 23 (1983) ("'[W]here Congress includes
particular language in one section of a statute but omits it
in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the
disparate inclusion or exclusion.'") (quoting United States
v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972)); Hirschey
v. F.E.R.C., 760 F.2d 305, 308 (D.C. Cir. 1985) (indicating
that Congress understands how to effect such results); see
also Altheimer, 983 F.2d at 805 (explaining that Congress has
neither explicitly nor implicitly overruled S 81). We thus
do not find that the Maine Indian Claims Settlement Act
implicitly repealed S 81 with respect to all PIN land.

-38-
38

sense but logic as well.20 v.

,
See Lummi Indian Tribe Whatcom
County 5 F.3d 1355, 1359 (9th Cir. 1993) (ruling that

Nonintercourse
Act
did
not apply to land Indian tribe purchased

in fee simple over which Congress previously terminated its

trust
obligation);
cf.

Fe
deral Power Comm'n v. Tuscarora Indian

Nation, 362 U.S. 99, 110-15 (1960) (finding that federal

government did not own an interest in lands Indian tribe

purchased in fee simple).

Applying S 81 to the Holden Lot also would

necessitate that almost every agreement for services executed

with an Indian tribe, no matter how minute, would require

Secretarial approval. See In re United States ex rel. Hall,

825
F.
Supp.
1422,
1434
(D. Minn. 1993) (discussing undesirable

implications of such an interpretation), aff'd, 27 F.3d 572

(8th
Cir.
1994),
cert.

de
nied, 115 S. Ct. 1112 (1995); see also

Raymond Cross, De-Federalizing American Indian Commerce:

Toward
a
New
Political Economy for Indian Country, 16 Harv. J.

L. & Pub. Pol'y 445, 489 (1993) (indicating that even as

presently interpreted, "[e]xperience has shown . . . that in

many cases . . . [S 81] harms, rather than helps, Indian

20. The fact that Congress explicitly determined that the
Nonintercourse Act does not apply to PIN further
distinguishes this case from the cases in which courts have
interposed a trust obligation in regard to real property that
Indian tribes have purchased in fee simple. See Alonzo, 249
F.2d at 196; 7,405.3 Acres of Land, 97 F.2d at 422-23.
Congress never stated that the Nonintercourse Act did not
apply to the real property at issue in Alonzo or 7,404.3
Acres of Land.

-39-
39

tribes. Its rigid formalism and over-inclusiveness chill

business dealings between tribes and third parties without

providing
substantial offsetting benefits."). We believe that

further
extending administrative authority over the Holden Lot

would neither favor, see Montana v. Blackfeet Tribe, 471 U.S.

759, 766 (1985), nor protect, see In re Sanborn, 148 U.S. at

227, Indian tribes. In fact, adopting PIN's interpretation

would frustrate Indian tribes' efforts to promote economic

development and fiscal autonomy.

This analysis reflects the modern trend in federal

Indian
policy away from outmoded paternalistic21 practices and

policies.

Se
e Cohen's Handbook at 180-206; Federal Indian Law

at
151-59.

Particularly during the last forty years, Congress

has endeavored to afford Indian tribes the latitude to pursue

their social, political, and economic goals as they determine

appropriate. See, e.g., 25 U.S.C. S 450 (proclaiming that

"prolonged
Federal
domination . . . has served to retard rather

than enhance the progress of Indian people and their

communities by depriving Indians of the full opportunity to

develop leadership skills crucial to the realization of self

government");
25 U.S.C. S 450a (declaring Congress' commitment

21. One proponent of S 81 described the statute as follows:
"If it is enacted and becomes part of the law it will be the
best shield, the best protection, and the best security for
the rights and the helplessness of these sons of the forest
that has ever been devised by American legislation or
American humanity." Cong. Globe 41st Cong., 3d Sess. 1483,
1484 (daily ed. Feb. 22, 1871) (comments of Senator Davis).

-40-
40

to
"the
establishment
of
a meaningful Indian self-determination

policy");
Blatchford

v.
N
ative Village of Noatak, 501 U.S. 775,

793
(1991)
(Blackmun,
J., dissenting) (noting that Congress has

passed legislation in recent decades "as part of a larger

national
policy
of
'self-determination' for the Native American

peoples").

To
find
S
81
applicable to a tract of real property

that PIN purchased in fee simple to promote its business

interests would contravene modern efforts to secure tribal

self-determination.

In
light
of
these
policy
considerations, the dictates

of common sense, the vast majority of S 81 jurisprudence, and

the Secretary's interpretation, we conclude that the second

Settlement
Agreement does not qualify as "relative to [Indian]

lands."

This Agreement did not pertain to Indian trust lands.

In fact, the second Settlement Agreement involved lands PIN

purchased in fee simple to promote its investment objectives

over which Congress expressly disavowed trust responsibility.

To rule that this Agreement necessitated the Secretary's

approval pursuant to S 81, we conclude, would strain the

statute's
ordinary
meaning and exceed its drafters' intentions.

We recognize that statutes affecting Indian tribes

must be construed liberally in favor of the tribes. See

Blackfeet Tribe, 471 U.S. at 766. The rule recited in

Blackfeet Tribe, however, does not require a court to ignore

compelling authority supporting a conclusion contrary to the

-41-
41

position
that a particular Indian tribe advances. See Lyng v.

Northwest Indian Protective Ass'n, 485 U.S. 439, 456 (1988).

We therefore hold that the Settlement Agreements did not fall

within
the
parameters
of
S 81, and thus that the two Settlement

Agreements constituted valid, binding releases that preclude

PIN from further pursuing its remaining claims.

2. Underlying Agreements

Despite the fact that S 81 does not apply to the

Settlement
Agreements, and thus that the Settlement Agreements

function to release PIN's remaining claims, we must briefly

consider whether S 81 applies to the underlying agreements at

issue
in
this case. We pursue this inquiry to deter potential

abuse
stemming from the execution of a settlement agreement in

the context of S 81. We are particularly concerned that

parties to an agreement for services relative to Indian trust

lands may seek to avoid securing Secretarial approval of such

agreement pursuant to S 81 by executing a relet that this

release did not constitute an agreement with an Indian tribe

for services relative to Indian lands, and that the release

functions to prohibit any action that a party to the release

initiates subsequently to void the underlying agreement

pursuant
to
S
81.22

To
avoid creating a potential safe harbor,

22. Even if such a release did preclude a party's action to
invalidate the underlying agreement pursuant to S 81, as in
the instant case, S 81's qui tam provision would permit
another party to bring suit in the name of the United States
to invalidate the underlying agreements if these underlying

-42-
42

we evaluate the three underlying agreements at issue in this

case to determine whether or not they necessitated the

Secretary's approval pursuant to S 81.

a. Asset Purchase Agreement

The Asset Purchase Agreement23 constituted the

operative agreement relating to the Partnership's purchase of

SHC.

This
Agreement
was
a pure sales contract. Without regard

to whether S 81's "services" component pertains to sales

contracts, see Menominee Tribe, 233 U.S. at 570-71 (finding S

81 applicable to contract for sale of logging equipment and

supplies); but see Hall, 825 F. Supp. at 1431-32 (ruling that

"Congress did not intend that section 81 govern sales

contracts"), the only real property that the Agreement

mentioned was real property that the seller, SHC, possessed,

not land that an Indian tribe, specifically PIN, owned. This

Agreement
simply
stipulated that the Partnership secured a $3.5

agreements did not bear the Secretary's approval. See Tribal
Development, 49 F.3d at 1212; United States ex rel. Yankton
Sioux Tribe v. Gambler's Supply, Inc. 925 F. Supp. 658, 668-
69 (D.S.D. 1996).

23. PIN refers both to the Asset Purchase Agreement and to
"associated contracts and documentation" as being void ab
initio pursuant to S 81. The Partnership executed a Non-
Competition and Consulting Agreement with John Schiavi on
December 30, 1996. Although this Agreement did provide for
services, in the form of consulting duties, it never
mentioned and did not relate to any Indian lands. The non-
competition agreements that the Partnership executed with CWC
similarly did not pertain to any Indian lands. Section 81,
therefore, does not apply to these "associated contracts and
documentation."

-43-
43

million
guaranteed loan from Key Bank; it neither required nor

referred
to
PIN's use of its land as collateral for this loan.

b. Partnership Agreement

We
find
that
the
Partnership Agreement did constitute

a
services
agreement
because it contained a provision dictating

that
Palmer
enjoyed
sole
responsibility for managing SHC to the

benefit of both Palmer and PIN. See Koberstein, 762 F.2d at

619 (finding that S 81 governs management contracts).

Nonetheless, despite PIN's assertion that the parties

envisioned the use of PIN's lands to advance SHC's business

activities, the Partnership Agreement neither specifically

mentioned
nor
indirectly
referenced any use of land. It merely

stated
that
PIN would provide a $1 million Letter of Credit to

secure Key Bank's Guaranteed Loan financing the purchase of

SHC. The Partnership Agreement, therefore, does not fall

within
the
parameters
of
S 81 because it does not constitute an

agreement for services relative to Indian lands.24

Because the service that the Partnership Agreement

provided for entailed the management of SHC, we briefly

evaluate
this Agreement in light of Altheimer, which addressed

the applicability of S 81 to a management agreement. See 983

F.2d
at
811.
The relevant Altheimer factors indicate that the

24. As previously noted, the parties to the Partnership
Agreement submitted this Agreement for the Secretary's
approval pursuant to S 81. The Secretary specifically
determined that S 81 did not pertain to the Agreement.

-44-
44

Partnership Agreement does not fall within S 81's purview.

Specifically, the Partnership Agreement did not relate to the

management of a facility to be located on Indian lands, and,

even if it did, the operation of such facility would not have

depended in any way on PIN's legal status as a separate

sovereign. See id.

c. Lease-Option Agreement

The Lease-Option Agreement, unlike the Partnership

Agreement, did not pertain to "services" relative to Indian

lands.25 The Lease-Option simply provided that Schiavi Homes

enjoyed the right to use and improve the Holden Lot for the

purpose of conducting its business. It also afforded Schiavi

Homes an option to purchase the Holden Lot. The Lease-Option

never mentioned and did not relate to the provision of

services. In addition, although it did involve real property

that
PIN
owned (the Holden Lot), as previously noted this land

was
not
within the parameters of S 81 because it was not trust

land. Even if the Holden Lot did constitute Indian trust

lands, S 81 would not apply to the Lease-Option Agreement

25. The Assignment of Lease executed on December 1, 1988,
transferring Schiavi Homes' entire interest in the Lease, and
particularly the option to purchase the Holden Lot, to Key
Bank as additional collateral for the repayment of its
Guaranteed Loan in the amount of $3,500,000 did not require
Secretarial approval under S 81. This agreement did not
entail any services and pertained only to the Holden Lot not
to PIN's trust lands. On July 20, 1989, moreover, PIN
secured Bureau of Indian Affairs approval for this Assignment
pursuant to Title IV of the Indian Financing Act of 1974, 25
U.S.C. SS 1521-1524.

-45-
45

because
the
Maine
Indian
Claims Settlement Act provided that 25

U.S.C. SS 396 & 415 would govern leases involving PIN

territory. See 25 U.S.C. S 1724(g)(3)(A)&(B) (providing that

25 U.S.C. SS 396a-396g & 415-415d govern leasing of PIN

Territory); see also Koberstein, 762 F.2d at 619 (indicating

that S 81 governs transactions relative to Indian lands for

which Congress has not passed a specific statute).

B. Breach of Contract

Palmer and Palmer Management assert that by filing

the instant suit, PIN breached the contractual obligation

memorialized in the Settlement Agreements to "release all

claims." In their counterclaim, these two cross-Appellants

sought damages from this purported breach deriving from the

"loss of time that could otherwise be spent in the pursuit of

legitimate business interests." On appeal, Palmer and Palmer

Management request damages "caused by the lawsuit outside of

attorney
fees."
26

Because we find the Settlement Agreements to

constitute
valid
releases not within the parameters of S 81, we

now
consider
Palmer and Palmer Management's breach of contract

counterclaims.

26. The district court devoted the majority of its analysis
to the issue of whether a party may recover attorney's fees
for the breach of a settlement agreement's release of claims.
The district court found that a party could not recover such
attorney's fees in the defense of a suit that itself
constituted a breach of a settlement agreement. See
Penobscot Indian Nation v. Key Bank, Civ. No. 94-0212-B, at 6
(D. Me. Dec. 13, 1995). Neither Palmer nor Palmer Management
raises this issue on appeal.

-46-
46

-47-
47

Both Settlement Agreements state: "The parties

hereto
have
been
collectively negotiating a final settlement in

the
Schiavi
Homes
loan
transaction, termination of business and

liquidation, and are desirous of reaching a final settlement

between the parties to avoid litigation now in existence or

that could hereafter arise." As mentioned earlier, both

Settlement Agreements expressly provided that the parties

"release, remise and forever discharge each other . . . from

all suits . . . at law or in equity . . . which directly or

indirectly
relate[]
to
.
. . any . . . transactions . . . among

each other." The district court dismissed Palmer and Palmer

Management's claim for lost business damages on the grounds

that PIN's lawsuit in violation of the Settlement Agreements

"was seemingly in good faith" and "was not frivolous."

Penobscot Indian Nation v. Key Bank, Civ. No. 94-0212-B, at 6

(D. Me. Dec. 13, 1995).

"A compromise agreement, fairly arrived at, is an

enforceable contract both under Maine law and general

doctrine."
27

Warner v. Rossignol, 513 F.2d 678, 682 (1st Cir.

1975);
see

al
so Phillips v. Fuller, 541 A.2d 629, 629 n.1 (Me.

27. Despite the fact that this case raises a federal
question, and thus that the district court exercised
jurisdiction pursuant to 28 U.S.C. S 1331 not 28 U.S.C. S
1332, we apply Maine law to the remaining claims because they
all involve state law and raise substantive rather than
procedural issues of law. See Erie R.R. Co. v. Tompkins, 304
U.S. 64, 78 (1938); Walton v. City of Southfield, 995 F.2d
1331, 1343 (6th Cir. 1993) (applying state law in federal
question case involving pendent state claims).

-48-
48

1988) (recognizing that claim can be asserted for a breach of

a settlement agreement, and, specifically, that such a claim

can
take
the
form of a counterclaim); A. L. Brown Constr. Co.,

Inc. v. McGuire, 495 A.2d 794, 798 (Me. 1985) (finding

settlement agreement to be an enforceable contract). Whether

or not an enforceable contract is breached does not turn on

whether or not the breaching party acted in good faith. Cf.

John
D.
Calamari & Joseph M. Perillo, The Law of Contracts 455

(2d
ed.
1977)
("Any
failure to perform a contractual duty which

has become absolute constitutes a breach."); E. Allan

Farnsworth,
Contracts

636 (1982) ("[T]o abandon the traditional

view
and
take
account
of
good faith in all cases would probably

be unworkable.").

The issue which demands our full attention,

therefore, concerns the nature of the damages that Palmer and

Palmer Management may receive as a result of PIN's breach of

the Settlement Agreements. Palmer and Palmer Management

contend
that
Dodge v. United States Auto. Ass'n, 417 A.2d 969,

975 (Me. 1980) supports their claim for damages other than

attorney's fees. In Dodge, the parties entered into a

settlement
agreement concerning a homeowners insurance policy.

The agreement included a provision releasing all claims

stemming from the insurance policy. Subsequent to the

execution of the agreement, plaintiff filed suit against the

insurance company. The insurance company then responded with

-49-
49

"a counterclaim for specific performance of the settlement

agreement and for damages resulting from [plaintiff's] . . .

breach thereof," id. at 972, which "consisted principally of

its attorney's fees incurred in defending the suit brought by

[the plaintiff] . . . in violation of the settlement

agreement," id. at 975. The Superior Court did not order

specific shed by the court's disposition of the main claims

asserted
by
[the plaintiff]." Id. at 975. The Superior Court

also
denied
the insurance company's claim for attorney's fees.

See id.

The insurance company cross-appealed these rulings,

recognizing that if the Maine Supreme Court affirmed the

Superior
Court's judgment, there would be no need to reach the

issue of specific performance. The Dodge court held:

Because of the pervasiveness and vigor of
the American rule making each party bear
its own attorney's fees, parties to a
settlement--in absence of an express
contractual provision to the contrary--
must be taken to intend to exclude
attorney's fees from the damages that
otherwise would be recoverable as a
foreseeable and probable consequence of a
breach of the agreement.

Id.

The
Maine Supreme Court explained in detail its denial of

damages
which normally attend a breach of contract in the case

of the breach of a settlement agreement:

An after-the fact rationalization for the
rule denying normal contract damages for
breach of settlement agreements can also
be
developed
from the strong public policy
favoring such settlements. Were the rule

-50-
50

otherwise, a lawyer would be much more
wary of informal settlement discussions
for fear of subjecting his client to the
added expense of the opposing party's
attorney's fees if it were later
determined that those discussions had in
fact reached the point of a binding
bilateral
agreement. On balance it may be
preferable to encourage free settlement
negotiations, undampened by the risk of
the heavy damages that would be assessed
in those relatively few cases where one
party fails to perform its agreement.

Id. at 976. The Dodge court thus denied the insurance

company's cross-appeal in full.

Although it may be debatable whether Dodge resolved

the issue concerning the possibility of a non-breaching party

recovering on a breach of contract theory the costs of

litigation, other than attorney's fees, resulting from its

defense of a suit filed in contravention of a settlement

agreement, we need not take up this debate today. Palmer and

Palmer Management have not directed us to any Maine case that

grants damages of the variety that they seek, and we have not

found
any
such case on our own initiative. We note that Maine

does
recognize the remedy of specific performance in the event

of a breach of a settlement agreement. See McGuire, 495 A.2d

at
798
(indicating that party may seek specific performance as

remedy for breach of settlement agreement). By ruling that S

81 does not apply to the Settlement Agreements in this case,

and
thus
that
these
Agreements preclude PIN's remaining claims,

we effectively have provided Palmer and Palmer Management the

-51-
51

equitable remedy of specific performance of the Settlement

Agreements.

We
need
not
sift alternative sources of authority to

resolve the exact issue of whether or not the law affords

damages in addition to specific performance in the event of a

breach
of
a
settlement
agreement28 because no material issue of

fact
exists
as
to
the
damages that Palmer and Palmer Management

sustained as a result of PIN's breach of the Settlement

Agreements in this case. See Fed. R. Civ. P. 56(e); Anderson

28. We recognize that certain jurisdictions may permit a
party to sue for both specific performance and consequential

See, e.g., v. , 428 N.W.2d 647, 658 (Iowa
damages in the case of the breach of a settlement agreement.
Berryhill Hatt
1988); see also Restatement (Second) of Contracts S 281(3)
(1981). Other jurisdictions, however, apparently require a
party to select between specific performance and monetary
damages in the event of a breach of a settlement agreement.
See, e.g., TNT Marketing, Inc. v. Agresti, 796 F.2d 276, 278
(9th Cir. 1986). Even those jurisdictions that appear to
afford an aggrieved party the right to sue both for specific
performance and for consequential damages are not consistent
in their approach. In Village of Kaktovik v. Watt, 689 F.2d
222 (D.C. Cir. 1982), for instance, the District of Columbia
Circuit first stated: "Upon breach [of a settlement
agreement] by one party, the other party may obtain damages
or specific performance as appropriate." Id. at 230; see
also Jackson v. Washington Monthly Co., 569 F.2d 119, 120 n.
1 (D.C. Cir. 1977). The Watt court then declared: "Upon
anticipatory breach of a settlement contract . . . the non-
breaching party m[ay] choose . . . to enforce the agreement
and perhaps also recover damages resulting from its breach .
. . ." Id. at 231. We therefore believe that further
exposition of this issue, see Blinzler v. Marriott Int'l,
Inc., 81 F.3d 1148, 1151 (1st Cir. 1996) (explaining that
when a state's highest court has not propounded on an issue
in question, "we seek guidance in analogous state court
decisions, persuasive adjudications by courts of sister
states, learned treatises, and public policy considerations
identified in state decisional law"), would be of little
benefit in this case.

-52-
52

v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) ("[T]here is

no
issue
for
trial
unless there is sufficient evidence favoring

the nonmoving party for a jury to return a verdict for that

party."); Celotex v. Catrett, 477 U.S. 317, 323 (1986) ("The

moving party is 'entitled to a judgement as a matter of law'

[if]
.
.
.
the nonmoving party has failed to make a sufficient

showing on an essential element of her case with respect to

which she has the burden of proof."); Cortes-Irizarry v.

Corporacion
Insular
de
Seguros, No. 96-1894, slip op. at 7 (1st

Cir.
April
16,
1997)
("To defeat a motion for summary judgment,

the nonmoving party must demonstrate the existence of a

trialworthy issue as to some material fact."). Palmer and

Palmer
Management
have
failed to submit any evidence of damages

resulting either from "loss of time that could otherwise be

spent in the pursuit of legitimate business interests," or,

more generally, from "the lawsuit outside of attorney fees."

We thus affirm the district court's grant of summary judgment

for PIN on Palmer and Palmer Management's counterclaims for

breach of the settlement agreement.

C. Defamation

Key Bank asserts that the district court erred in

granting
summary
judgment for Marcello on Key Bank's defamation

counterclaim.
The district court ruled that the press release

Marcello prepared and distributed to the media concerning the

two press conferences in September 1994 did not defame Key

-53-
53

Bank.29 Penobscot n

Maine law governing a defamation claim initiated by a private

person,
See , 906 F. Supp. at 22-23. Relying o
the district court determined that Marcello was not

negligent
in
drafting and circulating the press release to the

media because he reasonably relied "on the veracity of PIN's

complaint." Id. Finding that Marcello's conduct did not

amount even to the negligence applicable to private persons,

the district court did not consider whether or not Key Bank

constituted a public figure. See id.

Key Bank insists that a genuine issue of material

fact
existed
concerning whether or not Marcello was negligent.

Key
Bank
also
argues
that the district court improperly granted

summary judgment sua sponte on its defamation claims against

PIN, Phillips, and Pardilla. The other cross-Appellants

(Schiavi, Palmer, Palmer Development, and Palmer Management)

29. As it did below, Key Bank argues that the following
statements, contained in the press release that Marcello
drafted and disseminated, are defamatory: (1) the statement
claiming that "money . . . had been stolen from" PIN; (2) the
statement asserting that Key Bank "conspired and acted to
defraud the Penobscot Nation;" (3) the statement explaining
that "the conduct of Key Bank . . . resulted in the Penobscot
Nation entering into an improvident and unconscionable
partnership investment" pursuant to which it "relinquished
its right, its land, and its money to those who plundered the
Penobscot Nation, lied to the Penobscot Nation and its
members, and stole from the Penobscot Nation and its
members;" (4) the statement positing that "bad acts, fraud,
and bad faith committed by Key Bank . . . against the
Penobscot Nation is a far greater conspiracy than could have
been outlined" in the press conference; and (5) the statement
insisting that PIN "suffered grave financial losses and later
learned that they have been victimized, manipulated, lied to,
and used by Key Bank."

-54-
54

echo Key Bank's objection to the district court's sua sponte

ruling on their defamation claims against PIN. They maintain

that this ruling constituted reversible error.

1. Marcello

We
first
consider
whether the district court properly

granted
summary judgment for Marcello on Key Bank's defamation

claim. In order to state a claim for defamation in Maine, a

private
person must establish the following: "(a) a false and

defamatory statement concerning another; (b) an unprivileged

publication to a third party; (c) fault amounting at least to

negligence on the part of the publisher; and (d) either

actionability
of the statement irrespective of special harm or

the existence of special harm caused by the publication."

Powers, 596 A.2d at 69. The issue in this case is whether

Marcello's conduct constituted negligence.

We
find
that
the
existence of material issues of fact

precludes
the entry of summary judgment concerning this issue.

See

Lipsett

v.
University
of P. R., 864 F.2d 881, 885 (1st Cir.

1988) ("If, after . . . canvassing . . . the material

presented, the district court finds that some genuine factual

issue
remains in the case, whose resolution one way or another

could affect its outcome, the court must deny the motion.").

We
believe
that
reasonable jurors could find negligence in this

case. See Liberty Lobby, 477 U.S. at 248 (indicating that a

material issue of fact exists "if the evidence is such that a

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55

reasonable jury could return a verdict for the non-moving

party"); see also Mejias-Quiros v. Maxxam Property Corp., 108

F.3d 425, 427 (1st Cir. 1997) ("Negligence . . . is usually a

jury issue, but only if there exists evidence from which a

rational jury could find negligence in the case at hand.");

Taylor v. Gallagher, 737 F.2d 134, 137 (1st Cir. 1984)

("Summary judgment is inappropriate in [cases involving]

negligence
.
.
.
if
genuine issues of material fact exist or if

reasonable jurors could draw different inferences from agreed

facts.").

Reasonable jurors could draw a conclusion, at odds

with
the
district court's finding, that Marcello did much more

than "read the substance of PIN's complaint to the print and

broadcast
media at PIN's press conference." Penobscot, 906 F.

Supp. at 23. Marcello's press release did not simply recite

the complaint; it used such language as "lied to," "cheated,"

"manipulated," "stole[] from," and "conspired and acted to

defraud"
to
describe Key Bank's conduct. Given the negligence

standard in Maine of a reasonably prudent person acting under

like circumstances, see Lambert v. Tripp, 560 A.2d 1097, 1100

(Me. 1989); Wing v. Morse, 300 A.2d 491, 499 (Me. 1973);

Restatement (Second) of Torts S 283 (1978), we believe that

reasonable jurors could find that Marcello's characterization

of Key Bank's conduct amounted not simply to "colorful

adjectives
and
common
parlance," Penobscot, 906 F. Supp. at 23,

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56

but to negligence. See Marston v. Newavom, 629 A.2d 587, 592

(Me. 1993) ("[D]efamatory language must be 'construed in the

light of what might reasonably have been understood therefrom

by the persons who [heard] it. In interpreting the language,

it is . . . a question of . . . the understanding of those to

whom the words are addressed and of the natural and probable

effect
of
the words on them.") (quoting Picard v. Brennan, 307

A.2d 833, 835 (Me. 1973)).

Regardless of the reasonableness of the statements

that Marcello disseminated to the media at the press

conferences, a material issue of fact remains as to whether

Marcello actually "rel[ied] on the veracity of PIN's

complaint."

Penobscot, 906 F. Supp. at 23. In his deposition

testimony, Marcello stated repeatedly that he could not

recollect the exact documents that he used to assemble his

press
package. At his deposition, in fact, Marcello could not

locate the written notes or statements that he made in

preparation for the press conferences. There is a material

issue
as
to
whether Marcello even consulted PIN's complaint in

advance of the press conferences.

In any event, Marcello has not made a sufficient

showing that he was privileged to disseminate the defamatory

statements
to the media. Maine law provides that "allegations

made in pleadings are absolutely privileged." Dineen v.

Daughan, 381 A.2d 663, 664 (Me. 1978); see also Creamer v.

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57

Danks, 700 F. Supp. 1169. 1171 (D. Me.) (discussing Maine

judicial
proceedings
pleadings privilege), aff'd, 863 F.2d 1037

(1st Cir. 1988). The Maine Supreme Court has indicated that

the privilege may be "lost by unnecessary or unreasonable

publication
beyond the scope of the privileged circumstances."

Vahlsing Christina Corp. v. Stanley, 487 A.2d 264, 267 (Me.

1985); see also Sriberg v. Raymond, 544 F.2d 15, 16-17 (1st

Cir. 1976) ("[I]f an occasion is privileged as to

communications between certain parties, the privilege is lost

if the communication is made in such a manner as to

unnecessarily
and
unreasonably publish it to others, as to whom

the
occasion
is not privileged.") (quoting Galvin v. New York,

168
N.E.2d
262,
266
(N.Y. 1960)). The Vahlsing Christina court

reversed
the
dismissal of a defamation claim predicated on the

dissemination of false statements originally contained in a

complaint
on
the basis that publication removed the statements

from the privileged context. See id.

In
this
case,
a
media
relations consultant engaged by

a party to a lawsuit claims protection under the judicial

proceedings privilege for statements that he disseminated to

the press concerning the suit. Marcello published these

statements on the same day that PIN filed the complaint but

prior to the commencement of any courtroom activity. "The

judicial
proceedings
privilege reflects public policy regarding

the importance and necessity of the free flow of information

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58

during such proceedings." Creamer, 700 F. Supp. at 1171. In

light e

public
policy
underlying
the judicial proceedings privilege, we

doubt very much that this privilege applies to Marcello's

publications, which were neither reasonable nor necessary for

efficient disposition of the legal proceedings at issue
of the circumstances of the press conference and th
the .

See Frazier v. Bailey, 957 F.2d 921, 932 (1st Cir. 1992)

(explaining
that
under
Massachusetts law, if a communication is

"unnecessarily or unreasonably published," it is no longer

privileged); Dineen, 381 A.2d at 665 ("The purpose of the

privilege
is
to allow the attorney to litigate strenuously the

interests
of
his
client.
To fulfill this purpose the privilege

need only be broad enough to encompass statements relevant to

those interests. To extend the protection beyond this point

would be to abuse the public policy which acts rt has

explained, moreover, that this privilege applies to judges,

parties, witnesses, and attorneys. See id.; Dineen, 381 A.2d

at
664-65.

Marcello
directs us to no authority indicating that

the judicial proceedings privilege pertains to a media

consultant who is not a party or a witness or an attorney in

the dispute at issue.30

30. Marcello contends that his statements are privileged
because they fairly and accurately report a judicial
proceeding. The privilege that Marcello attempts to adopt at
this point pertains to defamatory statements contained in
reports of judicial proceedings prepared by reporters. See
Brown v. Hearst Corp., 54 F.3d 21, 25 (1st Cir. 1995); Jones
v. Taibbi, 512 N.E.2d 260, 266 (Mass. 1987). Regardless of

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59

We
thus
conclude that Marcello's statements were not

within the judicial proceedings privilege. Based on this

conclusion,
in addition to our findings that reasonable jurors

could determine that Marcello did more than read from PIN's

complaint and that a material issue of fact exists as to

whether Marcello actually relied on PIN's complaint in

formulating these statements, we believe that the district

court improperly granted summary judgment for Marcello.

We
note
that
if the trial court, with the assistance

of further factual development, determines that Key Bank

constitutes a public figure, it may resolve the defamation

issue
on
alternative grounds. According to the Supreme Court,

it
may
be
possible for someone to become a
public
figure through no purposeful action
of his own, but the instances of truly
involuntary public figures must be
exceedingly
rare. For the most part those
who attain this status have assumed roles
of especial prominence in the affairs of
society. Some occupy positions of such
persuasive power and influence that they
are deemed public figures for all
purposes.

More commonly, those classed as
public figures have thrust themselves to
the forefront of particular public
controversies in order to influence the
resolution of the issues involved.

Gertz v. Robert Welch, Inc., 418 U.S. 323, 345 (1974).

Although ostensibly a question of law suitable for our

the fairness or accuracy of Marcello's publications, he is
not a reporter. In any event, Maine does not appear to have
adopted the "reporter privilege" to this date, and we will
not speculate as to the future development of Maine law.

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60

resolution, see Quantum Elecs. Corp. v. Consumers Union of

United States, Inc., 881 F. Supp. 753, 763 (D.R.I. 1995);

Haworth v. Feigon, 623 A.2d 150, 158 (Me. 1991); Restatement

(Second) of Torts S 580A cmt. c (1978), a finding of public

figure status necessitates a detailed fact-sensitive

determination, see Bruno & Stillman, Inc. v. Globe Newspaper

Co., 633 F.2d 583, 589 (1st Cir. 1980); Quantum, 881 F. Supp.

at
763;
Lawrence
H.
Tribe, American Constitutional Law S 12-13,

at 880-81 (2d ed. 1988) (explaining that the determination of

whether an individual constitutes a limited public figure

necessitates
that
the
trial court establish first the existence

of a "public controversy," and second "that the nature and

extent
of
the
person's
participation in the controversy reached

some critical mass at which 'voluntary injection' occurred").

On
the
record
before
us
now, we cannot make this particularized

factual determination.31

If the trial court determines that Key Bank

constitutes a public figure, Marcello may claim a conditional

privilege
regarding
his
publications concerning Key Bank. Such

a privilege exists for statements concerning public figures.

See Curt is Publ'g Co. v. Butts, 388 U.S. 130, 155 (1967).

31. Marcello must establish sufficient evidence to support a
factual conclusion that Key Bank is a public figure. See
Restatement (Second) of Torts S 580A cmt. e (1977) ("For a
privilege created by the law to apply, the person who seeks
to dispel the seemingly tortious character of his conduct
normally has the burden of raising the issue of the privilege
and proving the existence of its elements.").

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61

Liability
does
not
attach for a defamatory statement concerning

a public figure unless the publisher of the statement acted

with knowledge or reckless disregard of the falsity of the

defamatory publication. See New York Times v. Sullivan, 376

U.S.
254,
279-80 (1964); Curtis Publ'g, 388 U.S. at 155; Time,

Inc. v. Firestone, 424 U.S. 448, 455 (1976); Michaud v.

Inhabitants
of
Livermore
Falls, 381 A.2d 1110, 1113 (Me. 1978).

On the record before us, we do not presume to direct a trial

court finding regarding either the predicates for or, in the

event that the trial court establishes the existence of such

predicates, the consequences of a conditional privilege.

2. PIN, Phillips, and Pardilla

We now turn to the issue of whether the district

court properly granted summary judgment sua sponte for PIN,

Phillips, and Pardilla. "It is [clear] that district courts

have the power to grant summary judgment sua sponte."

Berkovitz v. Home Box Office, Inc., 89 F.3d 24, 29 (1st Cir.

1996). Two conditions, however, circumscribe the district

court's exercise of this power: first, discovery must be

"sufficiently advanced that the parties have enjoyed a

reasonable opportunity to glean the material facts;" second,

the
district
court must "give[] the targeted party appropriate

notice and a chance to present its evidence on the essential

elements of the claim or defense." Id.; see also Stella v.

Tewksbury
,
4
F.3d
53,
55
(1st Cir. 1993); Jardines Bacata, Ltd.

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62

v. Diaz-Marquez, 878 F.2d 1555, 1560 (1st Cir. 1989).

In this case, discovery had proceeded to the point

that
the
parties understood the material facts. PIN filed its

complaint and conducted the press conferences in September

1994. The district court did not make its sua sponte ruling

until October 1995. By this time, the parties had compiled a

voluminous record that included depositions of all of the

parties involved in the press conference.

As in Berkovitz, however, the district court never

"gave the [cross-Appellants] a meaningful opportunity to cull

the best evidence supporting [their] position[s], and to

present that evidence, together with developed legal

argumentation
, in opposition to the entry of summary judgment"

with respect PIN, Phillips, and Pardilla. Id. at 31. On the

contrary, the district court's sua sponte ruling took these

parties by surprise; only Marcello had moved for summary

judgment and neither Schiavi nor the Palmer Defendants filed

defamation claims against Marcello.32

32. Although Key Bank did have the opportunity to present
its position with respect to Marcello, it did not in the case
of PIN, Phillips, and Pardilla because none of these parties
moved for summary judgment. Key Bank's argumentation may
have differed little in response to summary judgment motions
filed by PIN, Phillips, and Pardilla, given the similarity of
the facts and circumstances relating to its claims against
these parties. The nature of PIN, Phillips, and Pardilla's
relationship to the conduct at issue as well as the defenses
that these parties now assert in response to Key Bank's
defamation claims, however, support Key Bank's argument that
it would have responded differently to these parties had the
district court afforded it an opportunity to do so. See

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63

We acknowledge that "[t]his court from time to time

has
refused
to permit appellants to take advantage of supposed

ghts that had not been called to the district court's

attention by way of a [timely] motion to reconsider." Id.

(citing United States v. Schaefer, 87 F.3d 562, 570 n.9 (1st

1996);
oversi
Cir. Grenier v. Cyanamid Plastics, Inc., 70 F.3d 667,

678 (1st Cir. 1995); VanHaaren v. State Farm Mut. Auto. Ins.

Co., 989 F.2d 1, 4-5 (1st Cir. 1993)). Like the appellant in

Berkovitz
,
however,
the
Palmer Defendants timely filed a motion

to reconsider. Although Key Bank and Schiavi did not follow

suit,
the
considerations
that govern the filing of a motion for

reconsideration are very flexible. See Berkovitz, 89 F.3d at

31; United States v. Roberts, 978 F.2d 17, 21-22 (1st Cir.

1992). In any event, neither the cases that Berkovitz cites

nor Rule 56 imposes an obligation on the subject of a sua

sponte summary judgment ruling to move for reconsideration in

order to preserve its claims on appeal. We therefore refrain

from penalizing Key Bank and Schiavi for their purported

oversight. Because the district court failed to afford the

Stella, 4 F.3d at 56 (noting the special preparation
necessary to defend a motion for summary judgment).
Significantly, Key Bank did not present evidence, either in
its written or in its oral defense to Marcello's summary
judgment motion, concerning PIN, Phillips, or Pardilla. See
Berkovitz, 89 F.3d at 31 n.8 (reasoning that plaintiff at
issue in Berkovitz did not have an opportunity to put forth
evidence relating to summary judgment motion). We thus
include Key Bank in our disposition of the district court's
sua sponte defamation rulings.

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64

cross-Appellants
any
opportunity to oppose its grant of summary

judgment for PIN, Phillips, and Pardilla, we hold that this

ruling cannot stand.

D. Emotional Distress

The district court awarded PIN summary judgment on

Palmer's claims for both intentional and negligent infliction

of emotional distress deriving from the two press conferences

held
in
September
1994.

In his Brief, Palmer merely adverts to

the issue of whether the district court properly granted

summary judgment on these two claims. Specifically, Palmer

mentions
this issue only in the table of contents and a single

heading of his Brief. Other than these floating references,

Palmer never makes any argument in his principal brief

concerning either intentional or negligent infliction of

emotional
distress.

"It
is settled in this circuit that issues

adverted
to
on
appeal
in
a perfunctory manner, unaccompanied by

some developed argumentation, are deemed to have been

abandoned." Ryan v. Royal Ins. Co., 916 F.2d 731, 734 (1st

Cir.
1990);
s
ee also Williams v. Poulos, 11 F.3d 271, 285 (1st

Cir. 1993).

We recognize that, in its Reply Brief, PIN notes in

passing the fact that the district court "correctly" ruled

against Palmer and awarded summary judgment to PIN on the

emotional distress claims that Palmer mentioned in his

counterclaim. In his Reply Brief, Palmer articulates a

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65

"response"
to PIN concerning the emotional distress claims and

devotes four pages to the argument that the district court

improperly
granted
PIN
summary judgment on these claims. As we

have stated previously, "relief from an appellate court,

requested for the first time in a reply brief, is ordinarily

denied
as
a
matter
of
course." Aulson v. Blanchard, 83 F.3d 1,

7 (1st Cir. 1996); see also Indian Motorcycle Assocs. v.

Massachusetts Hous. Fin. Agency, 66 F.3d 1246, 1253 n.12 (1st

Cir. 1995). The general rule set forth in Aulson and Indian

Motorcycle applies to thi time in his Reply Brief.

E. Supplemental Jurisdiction

The
final
issue confronting us is whether or not the

district
court properly exercised and now retains jurisdiction

over the state law claims at issue in this case. 28 U.S.C. S

1367(a)
provides:

"[I]n
any civil action of which the district

courts have original jurisdiction, the district courts shall

have supplemental jurisdiction over all other claims that are

so related to claims in the action within such original

jurisdiction that they form part of the same case or

controversy under Article III of the United States

Constitution." Section 1367(a)'s discussion of supplemental

jurisdiction embraces both pendent and, more importantly for

our purposes, ancillary jurisdiction. See Rodriguez v. Doral

Mortgage Corp., 57 F.3d 1168, 1175 n.8 (1st Cir. 1995); Vera-

Lozano

v.
Int
ernational Broadcasting, 50 F.3d 67, 70 (1st Cir.

-66-
66

1995).

In this case, the district court exercised original

jurisdiction
pursuant
to
28 U.S.C. S 1331 because PIN's primary

claim
arose
under
25
U.S.C. S 81. The district court correctly

exercised jurisdiction to hear the Appellees' counterclaims

because state and federal claims form part of the same

constitutional case if they "derive from a common nucleus of

operative fact" or "are such that . . . would ordinarily be

expected to [be] tr[ied] . . . in one judicial proceeding."

United
States Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966);

see also Baker v. Gold Seal Liquors, 417 U.S. 467, 469 n.1

(1974)
(finding
ancillary jurisdiction when counterclaim arises

out of the "same transaction or occurrence" as the underlying

claim);
Rodri
guez, 57 F.3d at 1175-76 (quoting Gibbs, 383 U.S.

at 725). As the Magistrate Judge noted in this case, "the

truth or falsity of the statements [made at the press

conferences]
for
purposes of the defamation claim . . . turn[s]

on the same 'aggregate of operative facts' as the original

claim."
33

Pe
nobscot Indian Nation v. Key Bank, No. 94-0212-B,

33. We do not distinguish between the counterclaims of
Schiavi, Palmer, Palmer Development, Palmer Management, and
Key Bank against PIN and the counterclaims of Key Bank
against Marcello, Phillips, and Pardilla, for purposes of our
discussion of supplemental jurisdiction. All of the
counterclaims satisfy the "basic transaction-or-occurrence
test that is used to distinguish between compulsory and
permissive counterclaims." 6 Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure S 1404, at 32 (2d ed.
1990). Supplemental jurisdiction exists for all of the
counterclaims in this case.

-67-
67

at 2 (D. Me. Nov. 10, 1994); see also Painter v. Harvey, 863

F.2d 329, 333 (4th Cir. 1988) (finding counterclaim for

defamation fell within the ancillary jurisdiction of the

district
court);
Pochiro

v. Prudential Ins. Co., 827 F.2d 1246,

1251 (9th cir. 1987) (finding that if "defamatory statements

are sufficiently related to [sic] subject matter of the

original action," defamation claim constitutes a compulsory

counterclaim).

Although our affirmance of the district court's

ruling with respect to S 81 eliminates the sole federal claim

conferring
original jurisdiction pursuant to 28 U.S.C. S 1331,

the district court has discretion to hear the remaining state

law claims at issue. "In a federal question case, the

termination of the foundational federal claim does not divest

the district court of power to exercise supplemental

jurisdiction, but, rather, sets the stage for an exercise of

the court's informed discretion." Roche v. John Hancock Mut.

Life Ins. Co., 81 F.3d 249, 256-57 (1st Cir. 1996) (citing 28

U.S.C. S 1367(c)(3)). As the Roche court pointed out, "the

trial
court
must
take
into account concerns of comity, judicial

economy, convenience, fairness, and the like" in making this

decision. Id. at 257. This determination necessitates an

evaluation of the facts peculiar to each case.34

34. Finding that the district court properly considered the
state law claims at issue despite the fact that it had
disposed of the federal claim supporting original

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68

We
emphasize
that the decision to retain or disclaim

jurisdiction over the remaining state law claims at issue in

this case lies in the broad discretion of the district court.

See

Vera-Lozano
,
50
F.3d
at 70; Martinez v. Colon, 54 F.3d 980,

990
(1st
Cir.) (finding that "once the court determined so far

in advance of trial that no legitimate federal question

existed, the jurisdictional basis for plaintiff's pendent

claims
under
Puerto
Rico
law evaporated"), cert. denied, 116 S.

Ct.
515
(1995).

28
U.S.C. S 1367(c) specifically provides that

the district court may refuse to exercise supplemental

jurisdiction over a state law claim if the claim "raises a

novel or complex issue of State law," if the claim

"substantially
predominat
es over the claim or claims over which

the district court has original jurisdiction," or if "the

district court has dismissed all claims over which it has

original jurisdiction."

jurisdiction, the Roche court emphasized the following: "The
litigation had matured well beyond its nascent stages,
discovery had closed, the summary judgment record was
complete, the federal and state claims were interconnected,
and powerful interests in both judicial economy and fairness
tugged in favor of retaining jurisdiction." 81 F. 3d at 257.

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69

Conclusion

These appeals present many interesting issues. We

find the question of S 81's applicability to the transactions

at issue in this case particularly important in light of the

evolution
of
federal
Indian law and of the marketplace in which

Indian tribes actively participate. Our conclusion that S 81

does not apply either to the Settlement Agreements or to the

underlying
agreements
governing the parties' business relations

reflects our determination not simply to dovetail with those

authorities that have offered persuasive interpretations of S

81 before us, but further to reach a logical conclusion that

promotes the interests of Indian tribes as they grapple with

modern
economic
realities. We believe that in so doing we also

give effect to the intentions of those who adopted S 81 in

1872.

We affirm in part, reverse and vacate in part, and

remand
to
the
district
court for further proceedings consistent

with this opinion. Costs to Appellees and cross-Appellants.

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