Tribe Ordered to Pay $5.3 Million to Design Firm

An Indian tribe was ordered to pay $5.3 million to an architectural firm hired to design a $250-million expansion of its Palace Indian Gaming Center near Fresno, authorities said Wednesday.

Presnell Associates Inc. planned the casino for the Santa Rosa Rancheria Tachi-Yokut Tribe in 1999 and was working on a massive addition when tribal leaders terminated the contract and refused to pay for services already rendered.

Tribal leaders also filed a separate suit in federal court in Fresno to recover $8.5 million they had paid the architects to design the original casino. They say the firm failed to secure the proper federal approval before beginning its work.

Retired appellate justice Campbell M. Lucas arbitrated the dispute earlier this year and found that tribal leaders waived their sovereign immunity when they entered into the contract. Los Angeles County Superior Court Judge Elihu M. Berle denied the tribe’s motion to vacate the arbitration Tuesday and confirmed the award.

“In a very real sense, the tribe was taking a position that it is above the law in trying to invoke sovereign immunity,” said Beverly Hills attorney Eric M. George, who represented the Kentucky-based architectural firm. “Fortunately, the contract established otherwise.”

Conly J. Schulte, who represented the tribe, said he had not seen the order Wednesday. He did not know if his client would appeal. Tribal lawyers argued that the contract was invalid because the Louisville-based firm, now known as Qk4, failed to secure a federal gaming license and federal approval before contracting to do work for the casino. Schulte said Presnell also was not authorized to design a “Taj Mahal” for the San Joaquin Valley casino.

But Lucas found that the contract had been properly executed and that Presnell had upheld its part of the agreement. The arbitrator noted that the tribe’s leaders knew the scope of the project and “frequently boasted ... about the grandeur of this future resort and of the fact that the resort could cost $250 million to complete.”

Lucas blamed tribal leaders for opting to pay themselves before paying their bills.

“Confronted with the enormous successes brought by their casino operations, the tribe’s members chose to spurn their obligations to Presnell and use the money owed as part of distributions to its more than 600 members -- amounting to no less than $45.293 million for the year 2000 alone,” he wrote.

The casino’s financial officer even warned tribal officials in November 2000 against distributing $25,000 Christmas bonuses to its hundreds of members, saying the “tribe is heading down a very dangerous road,” Lucas wrote. The officer was fired the next day.

Lucas awarded the architectural firm $1.8 million for past services, $1.6 million in out-of-pocket expenses and $1.1 million in lost profits because the proposed expansion was never built. He also ordered payment of $700,000 for the firm’s legal fees.