Ninth Circuit Upholds Tribal Court Jurisdiction in Lexington Insurance Dispute

By Heidi McNeil Staudenmaier and Kelsey Haake

In Lexington Insurance Co. v. Mueller,¹ the Ninth Circuit Court of Appeals affirmed the district court’s decision regarding the jurisdiction of the Cabazon Reservation Court in a dispute between Lexington Insurance Company and the Cabazon Band of Cahuilla Indians (Cabazon Band). The case centered on alleged financial losses incurred by the Cabazon Band when they temporarily closed their businesses during the COVID-19 pandemic, leading to an insurance claim denial by the insurer.

The Cabazon Band, a federally recognized Native American tribe, operates businesses on its tribal lands insured by Lexington Insurance Company (Lexington). Following Lexington’s denial of its pandemic-related tribal loss claims, the Cabazon Band filed suit in the Cabazon Reservation Court (Reservation Court). Lexington responded by suing the Reservation Court judges — Chief Judge Doug Welmas and Judge Martin Mueller — in federal district court, seeking declaratory and injunctive relief to prevent the tribal court from exercising jurisdiction.

The district court partially granted and denied motions to dismiss, ruling in favor of the defendants’ summary-judgment motion, and denying Lexington’s summary-judgment motion. Both parties cross-appealed, setting the stage for the Ninth Circuit’s review.

At the heart of the case was the question of whether the tribal court had jurisdiction to adjudicate the Cabazon Band’s claims against Lexington. Lexington argued that the Reservation Court lacked jurisdiction, while the Defendants contended that the court had authority based on established legal precedents.

In evaluating the case, the Ninth Circuit relied heavily on its 2024 decision in Lexington Insurance Co. v. Smith,² a case involving nearly identical facts. In Smith, the court upheld tribal court jurisdiction over a similar insurance dispute involving the Suquamish Tribe, finding that Lexington’s business relationship with the Tribe constituted a consensual relationship under the exception established in Montana v. United States.³

The Ninth Circuit, in this case, found that the Cabazon Band’s claims met the same criteria. Specifically, “Lexington’s insurance contract with the Tribe squarely satisfies the consensual-relationship exception[,]”⁴ cited in Montana, which allows tribal jurisdiction over nonmembers engaging in commercial relationships with tribes.

During its review, the Ninth Circuit also looked at the Supreme Court’s decision in Whole Woman’s Health v. Jackson,⁵ which would foreclose Lexington’s ability “to sue [tribal judges] in federal court for injunctive relief.”⁶ The Ninth Circuit concluded “Whole Woman’s Health is not clearly irreconcilable with our circuit’s long standing recognition that the remedy to contest tribal-court jurisdiction is to seek prospective injunctive relief against a tribal-court judge.”⁷ The Ninth Circuit rejected this argument, distinguishing between state-court and tribal-court contexts. Citing prior circuit precedent, the Ninth Circuit reiterated that tribal judges could be sued under Ex parte Young⁸ when a plaintiff seeks to contest tribal-court jurisdiction.

In its final analysis, the Ninth Circuit concluded by affirming the district court’s decision, albeit on alternative grounds. This affirmation of the district court’s decision instills confidence in the legal process. It emphasized that the Reservation Court’s jurisdiction was supported by the insurance contract’s connection to the tribe’s businesses on tribal lands. This contractual and geographical nexus triggered the presumption of jurisdiction under the Ninth Circuit and Supreme Court longstanding precedents seen in Montana.

The ruling reinforces tribal courts’ ability to adjudicate disputes involving nonmembers when the underlying conduct arises from consensual commercial relationships with tribes. By upholding tribal jurisdiction in this case, the court affirmed the principle that tribes retain significant regulatory authority over nonmember activities on tribal lands.