Zempel v. Liberty

No. 04-595

IN THE SUPREME COURT OF THE STATE OF MONTANA

2006 MT 220

DARWIN CLOVERTON ZEMPEL,

Plaintiff and Appellant,

v.

LENORA LINDA LIBERTY, JOHN HERAK,
and TINY’S TAVERN OF CHARLO, INC.,

Defendants and Respondents.

APPEAL FROM: The District Court of the Twentieth Judicial District,
In and For the County of Lake, Cause No. DV 2004-03,
Honorable C.B. McNeil, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

William L. Managhan, Managhan Law Firm, PLLC, Kalispell, Montana

For Respondents:

Kati G. Kintli, Browning, Kaleczyc, Berry & Hoven, P.C.,
Helena, Montana

John Herek, pro se, Dixon, Montana

Submitted on Briefs: April 5, 2005

Decided: September 6, 2006

Filed:

__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.

¶1 Darwin Cloverton Zempel (“Zempel”) appeals from the orders of the District

Court of the Twentieth Judicial District, Lake County, which dismissed his negligence

claim against Lenora Linda Liberty (“Liberty”), John Herak (“Herak”), and Tiny’s

Tavern of Charlo, Inc. (“TTC”). We affirm in part, reverse in part, and remand.

¶2 In this appeal, we address the issue of tribal jurisdiction over a suit to which a

non-tribal member is a party. We receive this appeal pursuant to the District Court’s

decision to dismiss the suit on jurisdictional grounds. Thus, we must determine whether

the court erred in this regard.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 The Flathead Indian Reservation is located in northwestern Montana and is home

to the Confederated Salish and Kootenai Tribes (“CSKT”). TTC, a Montana corporation,

operates a bar in the town of Charlo, which is located within the exterior boundaries of

the Reservation. TTC’s sole shareholder, Liberty, is a tribal member.

¶4 Zempel, who is not a tribal member, spent the evening of July 4, 2003, at TTC.

Although he was not yet twenty-one years old, he was repeatedly served alcoholic

beverages by one or more bartenders. In the early morning hours of July 5, another

patron, Brandy Jo Moore (“Moore”), attempted to drive Zempel home in a car registered

to one Tina Zempel. Proceeding south on Montana State Highway 212, Moore lost

control of the vehicle, causing it to roll at least twice. Zempel was seriously injured in

the accident. Moore sustained fatal injuries and was pronounced dead at the scene.

2
¶5 In January of 2004, Zempel filed a negligence claim against Liberty, Herak, and

TTC. The Complaint alleged that: (1) Liberty and Herak were the owners and operators

of TTC; (2) TTC’s bartenders served Zempel numerous alcoholic beverages even though

they knew he was not of legal drinking age; (3) the bartenders continued to serve Zempel

after he became visibly intoxicated; (4) Zempel eventually vomited and lost

consciousness as a result of the alcohol; (5) Zempel was then placed in the passenger seat

of his car; (6) TTC’s bartenders continued to serve Moore after she became visibly

intoxicated; (7) the bartenders drank alcoholic beverages that evening, while on duty,

with Zempel and Moore; (8) the bartenders knew that Zempel was incapacitated, that

Moore was intoxicated, and that Moore intended to drive Zempel home; and (9) the

bartenders made no effort to stop Moore from attempting to drive Zempel home. Upon

these allegations, inter alia, Zempel claimed that the Defendants had acted negligently

and violated Montana statutory law. 1

1
Zempel claimed that TTC had violated § 27-1-710, MCA. However, he alleged no facts that
would constitute a “violation” of this statute. In fact, § 27-1-710, MCA, does not prohibit the
conduct at issue in this case. Rather, it merely “set[s] statutory criteria governing the liability of
a person or entity that furnishes an alcoholic beverage for injury or damage arising from an event
involving the person who consumed the beverage.” Section 27-1-710(1), MCA. Most
importantly for Zempel’s case, § 27-1-710, MCA, limits the grounds on which a finding of
liability may rest. Zempel also claimed that TTC had “violated” § 16-3-301(3), MCA. Although
the alleged facts do amount to violations of this statute, another statutory provision states that
such violations are not a basis for a finding of liability. Specifically, § 27-1-710(2), MCA,
provides (with one exception which Zempel has not raised) that “a person or entity furnishing an
alcoholic beverage may not be found liable for injury or damage arising from an event involving
the consumer wholly or partially on the basis of a provision or a violation of a provision of
Title 16.” Thus, while Zempel alleged statutory “violations,” his suit, as pled, merely amounts to
a negligence claim.

3
¶6 Liberty filed a Motion seeking dismissal of both herself and TTC. In doing so,

Liberty acted on her own behalf and purported to act on behalf of TTC. With this

Motion, Liberty argued that the District Court lacked jurisdiction to adjudicate the

dispute because of her status as a CSKT member and TTC’s status as an “Indian-owned

business.” In support of her arguments, she attached a certificate from the CSKT

Enrollment Office, verifying her membership with the Tribe. She also attached a

certificate, ostensibly issued by CSKT, which classified TTC as a “Certified Indian

Preference Business” and identified Liberty as TTC’s owner. The District Court

dismissed Liberty, stating “this Court lacks jurisdiction over Plaintiff’s complaint against

a tribal member.” The court declined to dismiss TTC, however, noting its status as a

Montana corporation.

¶7 Herak also filed a pro se Motion to Dismiss wherein he argued that he was not

properly named as a defendant. In support of this contention, Herak claimed that he had

no ownership interest in TTC. The District Court denied this request without addressing

Herak’s argument.

¶8 Thereafter, Liberty took a novel approach; she filed a document on behalf of TTC

which she identified as a “Response” to the court’s Order declining to dismiss the

corporation. She also filed another Motion to Dismiss on behalf of TTC. In doing so,

Liberty maintained that TTC “is an Indian-owned business and is entitled to Tribal

Jurisdiction.” To support this contention, Liberty attached copies of a number of

business documents, including, inter alia: (1) TTC=s Articles of Incorporation, showing

4
the business to have been formed pursuant to the Montana Business Corporation Act;

(2) TTC’s liquor license, issued by the State of Montana, permitting TTC to sell alcoholic

beverages in accordance with Montana law; (3) TTC’s gambling operator license, issued

by the State of Montana, permitting TTC to operate nine video gaming machines; and

(4) a tax assessment for the premises which TTC occupied, issued by the Lake County

Treasurer, assessing both state and county taxes.

¶9 Herak also filed a “Response” to the court’s denial of his Motion to Dismiss, as

well as another Motion to Dismiss. Once again, Herak claimed that he had no ownership

interest in TTC. While making the same argument which he had advanced in his first

Motion to Dismiss, Herak also referred the court to the documents which Liberty filed

with TTC’s second Motion to Dismiss.

¶10 The District Court then entered an Order dismissing Herak and TTC and,

consequently, dismissing Zempel’s Complaint in its entirety. As for Herak’s Motion, the

Court stated: “Herak has no ownership interest in [TTC or its] liquor license and his

motion to dismiss must be granted for the failure of Plaintiff’s complaint to state a claim

entitling Plaintiff to relief from said Defendant.” As for TTC’s Motion, the court

concluded that it lacked jurisdiction over the corporation, stating: “Liberty is the sole

owner and stockholder of said Defendant corporation and its State of Montana liquor

license and, therefore, said corporation Defendant is an Indian owned business.” Zempel

then appealed to this Court.

5
 STANDARD OF REVIEW

¶11 When a party seeks dismissal of a suit based on the claim that jurisdiction properly

lies in a tribal court, the trial judge must determine whether the complaint states facts

which, if true, would vest the district court with subject matter jurisdiction. See General

Constructors, Inc., v. Chewculator, Inc., 2001 MT 54, ¶¶ 13, 16, 304 Mont. 319, ¶¶ 13,

16, 21 P.3d 604, ¶¶ 13, 16 (citing Liberty Northwest Ins. Corp. v. State Compensation

Ins. Fund, 1998 MT 169, ¶ 7, 289 Mont. 475, ¶ 7, 962 P.2d 1167, ¶ 7). A district court’s

determination that it lacks subject matter jurisdiction is a conclusion of law which we

review to ascertain whether the court’s interpretation of the law is correct. General

Constructors, ¶ 16 (citing In re McGurran, 1999 MT 192, ¶ 7, 295 Mont. 357, ¶ 7, 983

P.2d 968, ¶ 7).

DISCUSSION

¶12 Before commencing our jurisdictional analysis we address Herak’s dismissal and

two issues regarding Liberty’s status as an individual defendant in this suit.

¶13 Zempel purports to appeal from the District Court’s Order dismissing Herak.

However, Zempel has not properly raised Herak’s dismissal as an issue in this appeal. As

noted above, while the District Court dismissed TTC and Liberty on jurisdictional

grounds, it dismissed Herak for a different reason—i.e., because he had no ownership

interest in TTC. In his initial brief on appeal, Zempel only presents arguments

challenging the District Court’s conclusions regarding the issue of jurisdiction. Then, in

his reply brief, Zempel presents a short argument challenging the District Court’s

6
decision to dismiss Herak. Essentially, Zempel seeks an opportunity to conduct

discovery regarding Herak’s ties to TTC. We will not address this argument because, as

our well-settled precedent dictates, this Court does not consider issues raised for the first

time in a reply brief. Pengra v. State, 2000 MT 291, ¶ 13, 302 Mont. 276, ¶ 13, 14 P.3d

499, ¶ 13 (citing Loney v. Milodragovich, Dale & Dye, P.C., 273 Mont. 506, 512, 905

P.2d 158, 162 (1995)). Accordingly, the District Court’s dismissal of Herak is affirmed.

¶14 As for Liberty’s status in this suit, the record does not reveal why Zempel named

her, TTC’s sole shareholder, as an individual defendant. “Under Montana law, it is well

settled that a corporation has a separate and distinct identity from its stockholders.”

Moats Trucking Co., Inc. v. Gallatin Dairies, Inc., 231 Mont. 474, 477, 753 P.2d 883,

885 (1988) (citations omitted). As such, shareholders are not personally liable for the

acts of a corporation, § 35-1-534(2), MCA, unless the distinction between the corporation

and the shareholder may be disregarded—i.e., unless the “corporate veil” is pierced,

Peschel Family Trust v. Colonna, 2003 MT 216, ¶¶ 21-42, 317 Mont. 127, ¶¶ 21-42, 75

P.3d 793, ¶¶ 21-42.

¶15 Zempel’s Complaint does not allege any acts attributable to Liberty individually.

Thus, it would seem that he may have sought to hold her accountable by piercing the

corporate veil which separates Liberty from TTC for liability purposes. Yet, the

Complaint does not allege any facts even remotely suggesting that TTC’s corporate veil

should be pierced in this case. Of course, the fact that Liberty is TTC’s sole shareholder

7
“is not, by itself, enough to warrant piercing the corporate veil.” Meridian Minerals Co.

v. Nicor Minerals, Inc., 228 Mont. 274, 285, 742 P.2d 456, 462 (1987) (citation omitted).

¶16 We recognize that plaintiffs are generally not obligated to name a particular cause

of action or plead the specific legal elements of a claim when filing a complaint, as we

operate under “notice pleading” rules. See Kunst v. Pass, 1998 MT 71, ¶ 35, 288 Mont.

264, ¶ 35, 957 P.2d 1, ¶ 35 (citations omitted). Indeed, pursuant to M. R. Civ. P. 8(a), a

complaint must only “put a defendant on notice of the facts the plaintiff intends to prove;

the facts must disclose the elements necessary to make the claim; and the complaint must

demand judgment for the relief the plaintiff seeks.” Kunst, ¶ 35 (emphasis added)

(citation omitted). We are also mindful that complaints must be construed broadly in the

plaintiff=s favor when determining whether he or she has stated a claim. See Fennessy v.

Dorrington, 2001 MT 204, ¶ 9, 306 Mont. 307, ¶ 9, 32 P.3d 1250, ¶ 9 (citation omitted).

¶17 Here, construing the Complaint broadly, and recognizing that plaintiffs are

generally not subject to any technical pleading requirements, it nonetheless appears that

Zempel failed to state a claim against Liberty. We make this observation because we are

troubled by the fact that Liberty was put to the inconvenience and expense of defending

herself in this suit even though Zempel failed to provide any justification for naming her

as an individual defendant. 2 Having expressed our concern, we will not resolve this issue

2
We are equally troubled that Zempel has dragged Herak into this litigation, as the Complaint
does not state a claim against him. In fact, the record before us contains absolutely nothing to
justify Herak’s inclusion as a defendant in this suit. Yet, he has been forced to defend himself in
the District Court proceedings and in this appeal.
8
here, as the parties have focused their arguments on the jurisdictional issue. 3 We

presume Liberty will be dismissed on remand unless Zempel properly amends his

Complaint, pursuant to M. R. Civ. P. 15(a), to justify her inclusion as a defendant.

¶18 Finally, as we did in Audit Services, Inc. v. Frontier-West, Inc., 252 Mont. 142,

148, 827 P.2d 1242, 1246, (1992), we note another important issue which neither the

parties nor the District Court have addressed. Non-lawyers may not represent

corporations in district court proceedings. Audit Services, 252 Mont. at 148, 827 P.2d at

1246 (citing Weaver v. Law Firm of Graybill, 246 Mont. 175, 178, 803 P.2d 1089, 1091

(1990)) (holding that a corporation is a legal entity which is separate from the agents who

act on its behalf, and it can not appear on its own behalf through an agent other than an

attorney). We have explicitly warned the district courts regarding this subject, having

identified it as “an issue of importance.” Audit Services, 252 Mont. at 148, 827 P.2d at

1246. Indeed, we have observed that a non-lawyer who appears on behalf of another in a

district court proceeding is guilty of contempt of court pursuant to § 37-61-210, MCA. 4

Weaver, 246 Mont. at 178, 803 P.2d at 1091.

¶19 Here, as noted above, Liberty purported to act on behalf of TTC in the District

Court proceedings, filing an initial Motion to Dismiss as well as a “Response” to the

District Court’s Order and a subsequent Motion to Dismiss. In doing so, she acted in

contempt of court. Liberty is not licensed to practice law in Montana, nor did she claim

3
Liberty has not filed a brief in this appeal.
4
Section 37-61-210, MCA, provides: “Penalty for practicing without license. If any person
practices law in any court, except a justice=s court or a city court, without having received a
license as attorney and counselor, he is guilty of a contempt of court.”
9
to be in the proceedings below. Yet, the District Court failed to hold her in contempt. In

fact, the court granted one the motions Liberty filed on behalf of TTC, allowing her to

“represent” TTC and thereby practice law without a license. Consequently, we again

admonish district courts to observe our case law on this important issue and exercise

vigilance in ensuring that only licensed legal practitioners represent corporate entities in

district court proceedings. 5

Tribal Sovereignty

¶20 Turning now to our jurisdictional analysis, we observe the United States Supreme

Court’s holdings regarding the retained sovereignty of Indian tribes and the extent of

tribal civil authority. The Court has stated that “Indian tribes are ‘domestic dependent

nations’ that exercise inherent sovereign authority over their members and territories.”

Oklahoma Tax Comm’n v. Potawatomi Tribe, 498 U.S. 505, 509, 111 S.Ct. 905, 909

(1991) (citation omitted). The Court has also stated:

Indian tribes are distinct, independent political communities, retaining their
original natural rights in matters of local self-government. Although no
longer possessed of the full attributes of sovereignty, they remain a separate
people, with the power of regulating their internal and social relations.
They have power to make their own substantive law in internal matters,
[including rules regarding membership, inheritance, and domestic relations]
and to enforce that law in their own forums.

Santa Clara Pueblo v. Martinez, 436 U.S. 49, 55-56, 98 S.Ct. 1670, 1675 (1978) (internal

citations and quotation marks omitted).

5
TTC has obtained proper representation for this appeal.
10
¶21 Although Indian tribes possess “attributes of sovereignty” over both their members

and their territories, “their dependent status generally precludes extension of tribal civil

authority beyond these limits.” Atkinson Trading Co., Inc., v. Shirley, 532 U.S. 645, 659,

121 S.Ct. 1825, 1835 (2001) (citation omitted). More specifically, “the inherent

sovereignty of Indian tribes [is] limited to their members and their territory: [E]xercise of

tribal power beyond what is necessary to protect tribal self-government or to control

internal relations is inconsistent with the dependent status of the tribes.” Atkinson, 532

U.S. at 650-51, 121 S.Ct. at 1830 (citation and internal quotation marks omitted) (first

alteration added, second alteration in original). Thus, “[t]ribal jurisdiction is limited: For

powers not expressly conferred them by federal statute or treaty, Indian tribes must rely

upon their retained or inherent sovereignty.” Atkinson, 532 U.S. at 649-50, 121 S.Ct. at

1830.

The Montana Rule

¶22 Montana v. United States, 450 U.S. 544, 101 S.Ct. 1245 (1981), is “the

pathmarking case concerning tribal civil authority over nonmembers.” Strate v. A-1

Contractors, 520 U.S. 438, 445, 117 S.Ct. 1404, 1409 (1997). The Montana Court

enunciated the “general proposition” that “the inherent sovereign powers of an Indian

tribe do not extend to the activities of nonmembers of the tribe.” Montana, 450 U.S. at

565, 101 S.Ct. at 1258. To this general rule, the Court then appended two exceptions,

noting, “[t]o be sure, Indian tribes retain inherent sovereign power to exercise some forms

of civil jurisdiction over non-Indians on their reservations, even on non-Indian fee lands.”

11
Montana, 450 U.S. at 565, 101 S.Ct. at 1258 (emphasis added). First, the Court stated:

“A tribe may regulate, through taxation, licensing, or other means, the activities of

nonmembers who enter consensual relationships with the tribe or its members, through

commercial dealing, contracts, leases, or other arrangements.” Montana, 450 U.S. at 565,

101 S.Ct. at 1258 (citations omitted). Second, the Court stated: “A tribe may also retain

inherent power to exercise civil authority over the conduct of non-Indians on fee lands

within its reservation when that conduct threatens or has some direct effect on the

political integrity, the economic security, or the health or welfare of the tribe.” Montana,

450 U.S. at 566, 101 S.Ct. at 1258 (citations omitted).

¶23 While Montana immediately dealt with tribal regulatory authority,6 it “broadly

addressed the concept of ‘inherent sovereignty.’ ” Strate, 520 U.S. at 453, 117 S.Ct. at

1413. Subsequent to the Montana decision, the Court held in Strate that as to

non-members, “a tribe’s adjudicative jurisdiction does not exceed its legislative

jurisdiction.” Strate, 520 U.S. at 453, 117 S.Ct. at 1413. The Strate Court then

proceeded to apply Montana’s “pathmarking” analysis to determine the extent of tribal

civil adjudicative jurisdiction. Particularly, the Court considered whether a tribal court

had jurisdiction over a nonmember’s personal injury action which arose out of a car

accident on a North Dakota state highway running through the Fort Berthold Indian

Reservation (land as to which the Tribe at issue could not “assert a landowner’s right to

6
The issue in Montana was “the sources and scope of the power of an Indian tribe to regulate
hunting and fishing by non-Indians on lands within its reservation owned in fee simple by non-
Indians.” Montana, 450 U.S. at 547, 101 S.Ct. at 1249.
12
occupy and exclude”). Strate, 520 U.S. at 442-43, 456-60, 117 S.Ct. at 1408, 1414-16.

Strate thus dictates that the Montana analysis controls the resolution of this appeal.

Specifically, Strate dictates that, absent an “express authorization [of tribal jurisdiction]

by federal statute or treaty,” the analytical framework of Montana—i.e., the “general

proposition” with its two exceptions—governs the determination of tribal civil

adjudicative jurisdiction with respect to suits in which a nonmember is a party. Strate,

520 U.S. at 445, 117 S.Ct. at 1409.

¶24 In Nevada v. Hicks, 533 U.S. 353, 121 S.Ct. 2304 (2001), the Court clarified that

the Montana framework governs the determination of tribal civil adjudicative jurisdiction

regardless of the status of the land where the conduct at issue occurred or where the claim

arose. Specifically, Justice Scalia stated, in writing for the Court, that Montana

“announc[ed] the general rule of no jurisdiction over nonmembers” and “clearly

impl[ied] that the general rule of Montana applies to both Indian and non-Indian land.

The ownership status of land, in other words, is only one factor to consider in

determining whether regulation of the activities of nonmembers is ‘necessary to protect

tribal self-government or to control internal relations.’ ” Hicks, 533 U.S. at 359-60, 121

S.Ct. at 2310. See also Hicks, 533 U.S. at 381, 121 S.Ct. at 2322 (Souter, J., concurring,

joined by Kennedy, J., and Thomas, J.) (“After Strate, it is undeniable that a tribe’s

remaining inherent civil jurisdiction to adjudicate civil claims arising out of acts

committed on a reservation depends in the first instance on the character of the individual

over whom jurisdiction is claimed, not on the title to the soil on which he acted.”); Hicks,

13
533 U.S. at 387, 121 S.Ct. at 2324-25 (O’Connor, J., concurring in part and concurring in

the judgment, joined by Stevens, J., and Breyer, J.) (“Today, the Court finally resolves

that Montana v. United States, 450 U.S. 544 (1981), governs a tribe’s civil jurisdiction

over nonmembers regardless of land ownership.”).

¶25 We note that while TTC acknowledges Montana as controlling authority, TTC

also suggests that we condition our reliance on the Montana framework by adopting a

presumption purportedly expressed by the United States Supreme Court. Specifically,

TTC asserts that the CSKT Tribal Court derives “broad civil jurisdiction from the

doctrine of inherent Tribal sovereignty” and that “[c]ivil jurisdiction over disputes

between tribal members and other entities, arising in whole or in part on the Reservation,

lies presumptively within the Tribal Court.” In support of this assertion, TTC cites Iowa

Mutual Ins. Co. v. LaPlante, 480 U.S. 9, 107 S.Ct. 971 (1987). However, in Strate, the

Court expressly rejected this distorted representation of Iowa Mutual. First, the Court

noted that Iowa Mutual did not establish tribal adjudicative authority, even over the

lawsuit involved in that case, but rather, described an “exhaustion rule allowing tribal

courts initially to respond to an invocation of their jurisdiction.” Strate, 520 U.S. at 448,

117 S.Ct. at 1410. The Court then quoted the subject language in Iowa Mutual: “Tribal

authority over the activities of non-Indians on reservation lands is an important part of

tribal sovereignty. Civil jurisdiction over such activities presumptively lies in the tribal

courts . . . .” Strate, 520 U.S. at 451, 117 S.Ct. at 1412 (internal citations and internal

quotation marks omitted). In rejecting the notion of broad tribal civil jurisdiction, such as

14
TTC would have us adopt here, the Court read the subject language “in context,” stating

that, in light of the authorities cited therein,

the Iowa Mutual statement emphasized by petitioners does not limit the
Montana rule. In keeping with the precedent to which Iowa Mutual refers,
the statement stands for nothing more than the unremarkable proposition
that, where tribes possess authority to regulate the activities of
nonmembers, “[c]ivil jurisdiction over [disputes arising out of] such
activities presumptively lies in the tribal courts.”

Strate, 520 U.S. at 453, 117 S.Ct. at 1413 (alterations in original). The Court then

reiterated its point, stating that Iowa Mutual does “not expand or stand apart from

Montana’s instruction on the inherent sovereign powers of an Indian tribe.” Strate, 520

U.S. at 453, 117 S.Ct. at 1413 (internal quotations omitted). Accordingly, we proceed

here without assuming any inherent tribal jurisdiction to adjudicate suits involving

nonmembers, but rather, following the Montana analysis as did the Court in Strate.

¶26 As noted, Zempel is not a member of CSKT. Further, TTC has not presented any

federal statute or treaty that provides for tribal jurisdiction in cases such as this. Thus, we

must determine whether either of the Montana exceptions allows for tribal adjudicative

jurisdiction here. In conducting this analysis, we note that the party asserting the

existence of tribal adjudicative jurisdiction under the Montana exceptions has the burden

of demonstrating the facts necessary to support that assertion. Strate, 520 U.S. at 456,

117 S.Ct at 1414; Atkinson, 532 U.S. at 654, 659, 121 S.Ct. at 1832, 1835.

¶27 Before proceeding, we must specify the meaning of a critical term in this analysis.

Although the Montana Court referred to “nonmembers” and “non-Indians”

15
interchangeably, the relevant distinction in a determination of inherent tribal civil 7

jurisdiction, with respect to the status of individuals, is between tribal members and

nonmembers. Hicks, 533 U.S. at 377, n.2, 121 S.Ct. at 2319, n.2 (Souter, J., concurring,

joined by Kennedy, J., and Thomas, J.) (“the relevant distinction, as we implicitly

acknowledged in Strate, is between members and nonmembers of the tribe.”). Indians

may be tribal members or nonmembers. Thus, for the purposes of a tribal civil

jurisdiction analysis, the term “non-member” encompasses anyone who is not a member

of the tribe at issue, including Indians who are members of a different tribe, as well as

Indians who are not members of any tribe. Accordingly, we do not employ the terms

“Indian” and “non-Indian” to describe an individual=s personal status for the purposes of

our jurisdictional analysis.

The “Consensual Relationship” Exception

¶28 The first Montana exception recognizes inherent tribal authority to exercise civil

adjudicative jurisdiction with respect to “activities of nonmembers who enter consensual

relationships with the tribe or its members, through commercial dealing, contracts, leases,

or other arrangements.” Strate, 520 U.S. at 456-57, 117 S.Ct. at 1415 (internal quotation

marks omitted).

7
In Oliphant v. Suquamish Tribe, 435 U.S. 191, 212, 98 S.Ct. 1011, 1022-23 (1978), the United
States Supreme Court held that Indian tribes lack criminal jurisdiction over non-Indians. In
Duro v. Reina, 495 U.S. 676, 684-85, 110 S.Ct. 2053, 2059 (1990), the Court held that Indian
tribes also lack criminal jurisdiction over nonmember Indians. Shortly after Duro was decided,
Congress provided for tribal criminal jurisdiction over nonmember Indians. See 25 U.S.C.
§ 1301(2).
16
¶29 This exception establishes a three-part test to determine whether a nonmember’s

relationship serves as the basis for tribal jurisdiction. The relationship: (1) must be

consensual; (2) must involve a tribe or a tribal member; and (3) must be entered into

through commercial dealings, contracts, leases, or “other arrangements.” We conclude

that the relationship at issue here does not qualify because it did not involve “the tribe or

its members” and it can not be considered “consensual.” Either of these facts,

independently, precludes a finding of tribal jurisdiction under the first Montana

exception, as the three requirements noted above are conjunctive.

¶30 The conduct at issue here is TTC’s alleged negligence in serving alcoholic

beverages to Zempel and failing to prevent Moore from attempting to drive him home.

The relationship from which this conduct arises is that between TTC and Zempel. 8 TTC

does not claim to be a tribal member. Indeed, the membership provisions of CSKT’s

Constitution, found in Article II, do not allow for corporations to obtain membership

status. However, TTC repeatedly asserts that it is an “Indian-owned business” and

suggests that Liberty’s status as a tribal member somehow imbues the corporation with a

tribal characteristic sufficient to establishes tribal jurisdiction. As noted above, it is well

settled that a corporation maintains a legal identity which is “separate and distinct” from

that of its shareholders. Moats Trucking Co., 231 Mont. at 477, 753 P.2d at 885. Thus,

we can not hold that TTC assumes the mantle of Liberty’s tribal membership for

8
As noted above, Zempel has not stated a claim against Liberty. Not surprisingly, then, TTC
does not identify any relationship between Zempel and Liberty that could be analyzed under this
exception. Thus, we are left to consider Zempel’s relationship with TTC.
17
jurisdictional purposes. Accordingly, we take TTC for what it is; a corporate entity

which exists by virtue of Montana law, and which derives income by selling alcohol to

the public under privilege of a Montana liquor license.

¶31 Because the relationship at issue here is between TTC and Zempel, and because

neither TTC nor Zempel are tribal members, no relationship with “the tribe or its

members” exists to provide a basis for tribal jurisdiction under this exception. Moreover,

even if TTC were a tribal member, its interaction with Zempel could not constitute a

“consensual” relationship under this exception, as Montana statutory law prohibits

Montana corporations from selling alcohol to individuals younger than twenty-one years

of age. Section 16-3-301(3), MCA. Accordingly, we hold that CSKT’s inherent

sovereignty does not encompass adjudicative jurisdiction over this suit pursuant to

Montana=s first exception.

The “Self-Government” Exception

¶32 The second Montana exception recognizes inherent tribal authority to exercise

civil adjudicative jurisdiction with respect to conduct that “threatens or has some direct

effect on the political integrity, the economic security, or the health or welfare of the

tribe.” Strate, 520 U.S. at 457, 117 S.Ct. at 1415 (internal quotation marks omitted).

¶33 In Strate, the United States Supreme Court considered whether a tribal court

retained the authority to adjudicate a nonmember’s personal injury suit which arose from

a car accident on a state highway running through a reservation. The Court held that the

conduct at issue did not qualify under Montana=s second exception, stating:

18
 Undoubtedly, those who drive carelessly on a public highway running
through a reservation endanger all in the vicinity, and surely jeopardize the
safety of tribal members. But if Montana’s second exception requires no
more, the exception would severely shrink the rule.

Strate, 520 U.S. at 457-58, 117 S.Ct. at 1415. In conjunction with this holding, Strate

provided critical guidance for understanding Montana=s second exception, stating:

Read in isolation, the Montana rule’s second exception can be
misperceived. Key to its proper application, however, is the Court’s
preface: “Indian tribes retain their inherent power to punish tribal offenders,
to determine tribal membership, to regulate domestic relations among
members, and to prescribe rules of inheritance for members. . . . But a
tribe’s inherent power does not reach beyond what is necessary to protect
tribal self-government or to control internal relations.”

Strate, 520 U.S. at 459, 117 S.Ct. at 1416 (emphasis added) (citation and alterations

omitted). 9 Immediately thereafter, the Court concluded: “Neither regulatory nor

adjudicatory authority over the state highway accident at issue is needed to preserve the

right of reservation Indians to make their own laws and be ruled by them.” Strate, 520

U.S. at 459, 117 S.Ct. at 1416 (citation and internal quotation marks omitted).

¶34 TTC claims, in conclusory fashion, that tribal jurisdiction is necessary to control

CSKT’s internal relations. However, TTC does not identify any internal tribal relation

that would in fact be controlled by tribal adjudicative jurisdiction in this case, nor can we

ascertain one.

9
The Atkinson Court observed that “the impact of the nonmember’s conduct must be
demonstrably serious and must imperil the political integrity, the economic security, or the
health and welfare of the tribe.” Atkinson, 532 U.S. at 659, 121 S.Ct. at 1835 (emphasis added)
(citation and internal quotation marks omitted).
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¶35 TTC does not argue that tribal jurisdiction in this case is necessary to protect tribal

self-government. We observe, however, that the alleged tortious conduct here could

surely endanger all in the vicinity of TTC, which may include CSKT members and the

general public, similar to the careless driving identified in Strate. This certainly

implicates CSKT’s interest in preserving the safety of its members. Moreover, the

“health or welfare of the tribe” clause in Montana=s second exception, if read in

isolation, would seem to be applicable here. However, in following the High Court’s

lead along the path marked by Montana, we can not equate this particular tribal interest in

membership safety with the interest in protecting tribal self-government—i.e., “the right

of [CSKT] to make [its] own laws and be ruled by them.” See Strate, 520 U.S. at 459,

117 S.Ct. at 1416. 10 To do so would dramatically broaden the scope of Montana=s

second exception and thereby, as noted in Strate, 520 U.S. at 458, 117 S.Ct. at 1415,

“severely shrink” Montana’s general rule.

¶36 As noted above, the ownership status of land involved in a suit is a factor in

determining a tribe’s need to protect self-government or control internal relations. Hicks,

533 U.S. at 359-60, 121 S.Ct. at 2310. Once the ownership status of the land at issue is

established, a court may then consider the interplay between the land, the conduct at

10
See also Boxx v. Long Warrior, 265 F.3d 771, 773, 777 (9th Cir. 2001) (as amended, reported
at 2001 U.S. App. LEXIS 24917) (holding that the Crow Tribe’s “great concern” with “alcohol-
related accidents” did not support tribal jurisdiction over a negligence suit involving a tribal
member and a nonmember which arose out of a single vehicle accident that occurred within the
exterior boundaries of the Crow Reservation on non-Indian fee land, and stating: “If we were to
find jurisdiction here, the exception would swallow the rule because virtually every act that
occurs on the reservation could be argued to have some . . . welfare ramification to the tribe.”)
(citation and internal quotations marks omitted).
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issue, and tribal self-government. See Ford Motor Co. v. Todecheene, 394 F.3d 1170,

1172, 1182 (9th Cir. 2005) (identifying the land at issue as tribal trust land and then

determining whether there existed any encroachment upon the land or damage thereto,

and whether use of the land had been interfered with). Here, rather than discussing the

ownership status of Montana Highway 212, where this tort claim arose, 11 or the

ownership status of TTC’s premises, where the conduct at issue occurred, TTC merely

asserts, repeatedly and fervently, that it is located entirely within the exterior boundaries

of the Flathead Indian Reservation; that it operates its business exclusively within the

exterior boundaries of the Reservation; and that the transaction at issue took place on the

Reservation.

¶37 However, these assertions do not address the relevant land issue—i.e., ownership

status of the land implicated in the suit. As noted in Hicks, the ownership of lands on an

Indian reservation may reside with the tribes, with tribal members, and even with

nonmembers, among others. Hicks, 533 U.S. at 383, 121 S.Ct at 2322 (Souter, J.,

concurring, joined by Kennedy, J., and Thomas, J.). Thus, it avails TTC nothing to

establish that that lands involved are located “within the exterior boundaries of the

11
Although it runs through the Flathead Indian Reservation, Montana State Highway 212 is
considered “alienated, non-Indian land” for the purposes of jurisdictional analysis. Strate, 520
U.S. at 454, 117 S.Ct. at 1413; see also Wilson v. Marchington, 127 F.3d 805, 813-14 (9th Cir.
1997). A tort claim cannot arise until all the elements of the tort, including damages, are present.
See Gabriel v. School Dist. No. 4, Libby, 264 Mont. 177, 180-81, 870 P.2d 1351, 1352-53 (1994)
(holding that because death is a necessary element in a wrongful death suit, the cause of action
arises where the death occurs). “[A] tort is not wrongful conduct in the air; the arrow must hit its
mark. Until there is hurt, there is no tort.” Heil v. Morrison Knudsen Corp., 863 F.2d 546, 550
(7th Cir. 1988) (internal citation omitted). Thus, while the underlying alleged conduct occurred
on TTC’s premises (the ownership status of which is unknown), Zempel’s claim arose on the
State highway.
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Flathead Indian Reservation.” As TTC fails to present any relevant argument as to how

the ownership status of the land involved in this suit may factor into an analysis under the

second Montana exception, we will not address the issue further.

¶38 Pursuant to Strate, we must recognize that CSKT’s adjudicative jurisdiction “does

not reach beyond what is necessary to protect tribal self-government or to control internal

relations.” Strate, 520 U.S. at 459, 117 S.Ct. at 1416 (citation and internal quotation

marks omitted). The conduct at issue here—TTC’s alleged negligence in serving

alcoholic beverages to Zempel and failing to prevent Moore from attempting to drive him

home—while potentially dangerous to individual tribal members, does not pose a threat

to CSKT’s self-government. Thus, tribal adjudicative jurisdiction over this action is not

necessary to preserve CSKT’s right to make its own laws and be ruled by them. As such,

we hold that CSKT’s inherent sovereignty does not encompass adjudicative jurisdiction

over this suit pursuant to Montana’s second exception.

CONCLUSION

¶39 The CSKT Tribal Court does not have jurisdiction over this case brought by a

nonmember against a Montana corporation and a tribal member. TTC has failed to

identify any federal statute or treaty that provides for tribal adjudicative jurisdiction here.

Further, TTC has failed to demonstrate either a qualifying consensual relationship or a

threat to tribal self-government that would overcome Montana=s general rule prohibiting

tribal adjudicative jurisdiction over suits involving nonmembers. Thus, we conclude that

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the District Court erred in dismissing Zempel’s claim against TTC and Liberty on

jurisdictional grounds.

¶40 We affirm the District Court=s dismissal of Herak. We reverse the court’s

dismissal of TTC and Liberty and the consequent dismissal of Zempel’s Complaint.

Accordingly, we remand for further proceedings.

/S/ JAMES C. NELSON

We concur:

/S/ KARLA M. GRAY
/S/ PATRICIA COTTER
/S/ JOHN WARNER
/S/ W. WILLIAM LEAPHART
/S/ BRIAN MORRIS
/S/ JIM RICE

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