Debt May Force Nooksack River Closure

The Nooksack River Casino in Deming, Washington, owned by the Nooksack Indian Tribe's Nooksack Business Corporation, could be forced to close due to $15 million in unpaid loans. When loan servicers Outsource tried to collect past-due loans on the tribe's other casino, the tribe dissolved its ownership entity and transferred the casino’s assets.

The Nooksack River Casino in Deming, Washington could close, depending on how the Whatcom County Superior Court rules regarding the casino’s debt. The situation dates back to 2006, when the Nooksack Business Corporation, owned by the Nooksack Indian Tribe and owner of the casino, obtained million in loans from the now-defunct BankFirst to pay off debt and renovate the casino.

The corporation made payments for a year before defaulting. At the time it made three agreements with loan servicers Outsource Services Management. After the casino failed to make payments under each agreement, Outsource sued for breach of contract in Whatcom County Superior Court. The tribe agreed it had waived sovereign immunity, but it argued the Superior Court did not have jurisdiction over the case and moved for dismissal. The case made its way to the Washington State Supreme Court, which ruled in August 2014 that the tribe could not claim its sovereignty overrode the terms of the loan contract. The case was sent back to Superior Court and was heard on Friday, April 17 by Whatcom County Superior Court Judge Deborra Garrett.

Attorney Jerome Miranowski, representing Outsource, requested a summary judgment of $20.7 million in past-due loan payments, fees and interest. Attorney Connie Sue Martin, representing the tribal corporation, argued Outsource had failed to show the casino had actually made any money on top of what it deemed necessary for daily operations, and therefore had failed to show that anything was owed under the terms of the loan.

In 2012, Outsource tried to collect $26 million in past-due loan amounts on its other casino, Northwood, then Northern Crossings. At that time the dissolved its ownership entity Nooksack Business Corporation II and transferred all of that casino’s assets to another entity, according to court documents.

Miranowski said, “That’s why we’re pushing for a judgment, so we get protections. The tribe was very bold to simply dissolve the Crossings corporate entity and transfer to another one not subject to the judgment.”

Garrett said the loan agreement would prohibit that, but she said she would enter an order to prohibit the tribal corporation from transferring “all or substantially all of its assets to another entity.” Garrett also said Outsource was not allowed to try to collect money until a judgment is issued.