Case Conclusion Date: 04.13.2006
Practice Area: Real Estate
Outcome: Affirmed decision in favor of client
Description: John argued this case and established new case law regarding the priority of interests in Indian trust land. This was the appeal of a case in which John obtained a favorable decision for his client in Bankruptcy Court. It was a case of first impression, as no court had previously determined how to apply state, tribal and federal law in a foreclosure of Indian trust land. The case involved a commercial property on Indian trust land on which John's client held a deed of trust, which was recorded both in the county and with the Bureau of Indian Affairs (BIA). The Indian owner defaulted and his client foreclosed. John's client then attempted to evict a billboard tenant in tribal court. The lease was entered into by the owner after John's client obtained the deed of trust. The tenant filed for bankruptcy and claimed that its lease had priority over the deed of trust because, although neither the lease nor a memorandum of lease was recorded in the county records, it was recorded with the BIA before the deed of trust was. The U.S. Bankruptcy Court for the Eastern District of Washington (Spokane) granted John's client relief from stay to proceed with the eviction and the court determination that the deed of trust had priority over the lease that was not recorded in the county. The case was subsequently appealed to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit held that for purposes of determining priority, a lender perfects its lien over Indian trust land and establishes its priority over subsequent interest holders when the lender records its deed of trust in the real property records of the county in which the property is located, in accordance with state law, regardless of whether it is also recorded in the BIA Title Plant.