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July 27, 1993

JOSEPH FLUENT, et al., Plaintiffs,

The opinion of the court was delivered by: CAROL E. HECKMAN


 Pending before the court is Defendants' motion to dismiss and/or for summary judgment. Pursuant to 28 U.S.C. 636(b)(1)(B), this motion was referred to the undersigned to hear and report. For the reasons set forth below, Defendants' motion should be granted.


 Plaintiffs Salamanca Coalition of United Taxpayers, Inc. ("SCOUT"), representing nearly 600 lessees, and five individual lessees, commenced this action in November of 1990 against the Seneca Nation of Indians ("Nation"), and against the Salamanca Indian Lease Authority ("SILA"), the City of Salamanca and various City officials to compel the Nation to renew their leases for up to 99 years. Other relief was sought, including a declaration that the agreement negotiated by SILA, the City and the Nation for renewal of the leases was null and void.

 Plaintiffs moved for a temporary restraining order and preliminary injunction against SILA and its members seeking to prevent SILA's future operation and any future use by SILA of City funds and resources. On January 8, 1991, this motion was denied by the District Court. On January 25, 1991, the District Court dismissed all claims against the Nation, finding that the Nation was immune from suit. It also dismissed the first, eighth and tenth causes of action against the remaining Defendants on the ground that an adjudication of those claims in the absence of the Nation would impede the Nation's ability to protect its interest in the subject of those claims. On March 18, 1991, the District Court's decision was upheld by the Second Circuit. Fluent v. Salamanca Indian Lease Authority, 928 F.2d 542 (2d Cir.), cert. denied, 116 L. Ed. 2d 48, U.S. , 112 S. Ct. 74 (1991).

 On October 25, 1991, Defendants moved to dismiss or for summary judgment as to the remaining claims in the complaint. This motion was referred to the undersigned to hear and report on February 10, 1993. Argument on the motion was scheduled for April 27, 1993 but was subsequently adjourned with the consent of counsel until May 13, 1993. On May 13, oral argument was held and the parties were requested to file supplemental papers addressing certain issues which came up during oral argument. This supplemental briefing was completed by June 15, 1993. *fn1"


 The dispute giving rise to this action has been thoroughly described in the Second Circuit's opinion of March 15, 1991, as well as in the District Court's orders of January 8 and January 25, 1991.

 During the mid-nineteenth century, the Nation leased tribal lands within the City and outlying villages, known as the Congressional Villages, to settlers and railroads. These leases were validated by Congress in the Act of February 19, 1875, ch. 90, 18 Stat. 330 ("1875 Act"). The leases were renewed in 1880 for a 12-year term, and again in 1892 for a 99-year term under the Act of September 30, 1890, ch. 1132, 26 Stat. 558 ("1890 Act"). This action arises from the dispute which has developed concerning the renewal of these 99-year leases, all of which expired on February 19, 1991. *fn2"

 In 1969, the New York State legislature enacted sections 1790-99 of the Public Authorities Law. This statute created SILA as a public benefit corporation authorized to negotiate and enter into a "master lease" with the Nation for all reservation lands underlying the City. N.Y.Pub.Auth.Law §§ 1791(e), 1794. During the latter course of nearly twenty years of lease negotiations between SILA and the Nation, the "master lease" concept was rejected (Item 1, PP 62-63 & Exh. F, p. 2).

 SILA then sought and received authorization from an overwhelming majority of lessees "to negotiate with the [Nation] and its legally authorized representatives for the terms and provisions of a renewal of" their leases (Item 1, Exh. G). By letter dated September 3, 1987 (Item 1, Exh. I), SILA notified the lessees as follows:

By virtue of an Act of Congress in 1875, all so-called "99-year leases" are renewable at the option of the lessee. The key word here is "option." The lease is not automatically renewable -- you must exercise the option or right to renew and you must negotiate for the terms of such renewal. . . . It is not the intention of the [SILA] to sign or execute a renewal lease on your behalf, but merely to negotiate such lease. It will be your decision to either sign or not sign the leases so negotiated for you by the [SILA].

 The authorization form contained an express provision that SILA "shall have no authority to execute or accept such a renewal lease for [the lessee] without [the lessee's] specific written authority" (Item 1, Exh. G).

Q. If I do not like the negotiated terms, what can I do?
A. The [SILA] has no legal ability to bind the lessees to any term, condition or amount of annual lease rental payment. The [SILA] is only capable of negotiating for all the provisions to be contained in a new lease for the lessees. As an individual lessee you do have the right to accept or reject the new lease or to negotiate your own terms with the Seneca Nation.

 In mid-July of 1990, the City and the Nation signed a renewal agreement (the "Agreement"), which offered lessees new leases for a term of 40 years, with the right to renew for an additional 40 years ("40/40 leases")(Item 1, Exh. G). Annual rents were based on the fair market value of the land, without improvements.

 The Agreement established the total annual rental at $ 800,000.00, to be collected and paid by the City, subject to adjustment based on yearly reappraisal of land values (id.). One of the conditions of the Agreement was payment by the federal and state governments of sums approximating the difference between the fair market rental value of the land and the rents actually received by the Nation over the past 99 years. Congress subsequently enacted the Seneca Nation Settlement Act of 1990, 25 U.S.C. §§ 1774-1774h (the "1990 Act"), in which it validated the Agreement between the Nation and the City and agreed to pay the Nation approximately $ 35 million. In July, 1991, New York passed legislation in which it agreed to pay $ 25 million. 1991 N.Y.Laws 518.

 On September 4, 1990, the Nation sent a copy of the 40/40 lease to each lessee, with instructions on how to verify a claim to a leasehold interest and other information (Item 1, Exh. N). In that letter, the Nation stated that "the terms of the new lease have been agreed upon by the Nation and the City . . . . They will not be altered" (id.).

 On November 2, 1990, approximately 350-400 lessees notified the Nation that they were electing to renew their leases for an additional 99-year term, purportedly relying on provisions in the 1875 and 1890 Acts (Item 1, Exh. C). The form notification letter used by these lessees stated: "This letter constitutes neither an acceptance nor rejection of [the] proposed 40/40 lease agreement and it is my understanding that my option to execute that lease agreement continues through and including February 19, 1991" (id.).

 On the same day, approximately 300-350 lessees notified SILA that they each were cancelling their authorization for SILA to negotiate with the Nation on their behalf (Item 1, Exh. O).

 On November 9, 1990, the Nation refused to renew the leases for additional 99-year terms. According to the Nation, the 40/40 lease proposed in the 1990 Agreement represented a "compromise offer." The Nation advised the lessees that it would consider any litigation, request for arbitration, or continued assertion of a right to a renewed 99-year lease as a rejection of the proposed 40/40 lease (Item 1, Exh. D).

 On November 14, 1990, SILA acknowledged receipt of the revocation letters, stating that:

The consent which you executed to the SILA and which you now request to withdraw has already been exercised by the SILA inasmuch as the negotiations which the consent authorized have long since been concluded -- a fact of which we are sure you are aware.
The SILA will attribute some purposeful reason to your withdrawal of such consent, to wit:
1. That the SILA is not authorized to conduct any further lease negotiations on your behalf.
2. That you have anticipatively [sic] rejected the new proposed lease and consequently your name will be removed from the roll of those entitled to acquire a new lease as the same has been proposed. In furtherance of this interpretation of your letter we have, on this date, advised the [Nation] of your rejection of the newly proposed lease and requested the [Nation] to remove your name from the list of those entitled to a newly proposed lease.

 Item 1, Exh. P.

 On November 15, 1990, counsel for Plaintiffs wrote to the City and the Nation objecting to SILA's interpretation of the individual lessees' revocation of SILA's authority as a rejection of the proposed 40/40 lease, and asking the Nation to disregard that interpretation (Item 1, Exh. R). In a letter dated November 21, 1990 (Item 1, Exh. Q), Calvin John, President of the Seneca Nation of Indians, responded to counsel's request as follows:

Because your letter does not identify any client or person on whose behalf you are writing, the Nation will not respond to your characterization of actions taken by our lessees. The Nation has previously explained that it will deal only with lessees who have proven their right to renew pre-existing leases, or with their duly authorized agents and legal representative, including of course the [SILA]. . . . The Nation is now in the process of: (1) reviewing the cancellations of authorizations which the City has now transmitted to the Nation; (2) reviewing the [SILA]'s response to these cancellations, and (3) identifying which of the lessees who wrote to the Nation have also cancelled their authorization. The Nation will consider what further action to take when that review is concluded.

 Meanwhile, on November 19, 1990, Plaintiffs' counsel met with representatives of SILA and the City. In a letter to Mayor Carbone dated November 20, 1990, Plaintiffs' counsel confirmed Plaintiffs' position that, having concluded its negotiations with the Nation, SILA no longer had any authority for its continued existence. The stated purpose of the letter was to put SILA and its individual members on notice that they would be held "responsible for any economic or other damage caused by SILA to any individual lessee with respect to any conduct which SILA has engaged in the past or may in the future engage in" (Item 1, Exh. S). Counsel also discussed the apparent conflict arising from City Attorney David Franz's legal representation of both the City and SILA (id.).

 On November 30, 1990, Plaintiffs filed this action, asserting twelve separate causes of action for injunctive and monetary relief under various theories of federal and state law. Plaintiffs allege federal question jurisdiction under 28 U.S.C. §§ 1331 and 1343(a)(3) and (4) for claims arising under the Acts of 1875 and 1890, the federal Non-Intercourse Act, the First and Fourteenth Amendments, and 42 U.S.C. § 1983.

 The parties agree that the claims asserted in the first, fourth, sixth, eighth and tenth causes of action have been dismissed from the case or are moot. Defendants now move for summary judgment or dismissal of the remaining claims in the complaint. Each of those claims will be discussed in turn below.


 Second Claim

 The second claim alleges that New York's Public Authorities Law, which established SILA, is unconstitutional as a matter of law. According to Plaintiffs, the state's establishment of a public authority to negotiate a master lease with the Nation was precluded by the federal Non-Intercourse Act, 25 U.S.C. § 177, which prohibited conveyance of Indian lands in the absence of treaty or convention. Plaintiffs also assert that the establishment of SILA violates Article 1, § 8 of the Constitution, which provides that " . . . Congress shall have the Power . . . To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes . . . ."

 Defendants have moved for summary judgment dismissing the second claim pursuant to Rule 56 of the Federal Rules of Civil Procedure on the ground that Plaintiffs have failed to demonstrate that the Non-Intercourse Act applies to the leases at issue or that §§ 1790-99 of the Public Authorities Law is otherwise unconstitutional.

 Summary judgment is appropriate if the pleadings, discovery materials, and affidavits on file "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). In reaching this determination, the court must assess whether there are any material factual issues to be tried while resolving ambiguities and drawing reasonable inferences against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986); Coach Leatherware Co., Inc. v. Anntaylor, Inc., 933 F.2d 162, 166-67 (2d Cir. 1991). In order to avoid summary judgment, however, the non moving party is under the obligation "to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986); Burke v. Bevona, 931 F.2d 998, 1001 (2d Cir. 1991). "Entry of summary judgment indicates that no reasonable jury could return a verdict for the losing party." Coach Leatherware, Inc. v. Anntaylor, Inc., supra, 933 F.2d at 167.

 A. The Non-Intercourse Act.

 The federal Non-Intercourse Act provides in pertinent ...

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