The Santa Ysabel Band of Mission Indians is facing a lawsuit from its casino partners, an Arizona tribe, who helped it secure the $30 million loan used to build the North County tribe's facility in 2007.

The 70,000-square-foot casino has struggled financially since it opened near Julian four years ago. Last year, the tribe's financial backers, the Yavapai-Apache Nation in Arizona, filed a lawsuit against Santa Ysabel claiming the North County tribe had failed to make its loan payments. The case does not mention how much the tribe owes.

However, before addressing the financial matter, the courts have to decide whether the Yavapai tribe has the right to sue Santa Ysabel in state court, according to legal documents. As a sovereign nation, the Santa Ysabel tribe claimed immunity against the lawsuit.

In court documents, the Yavapai tribe claims that Santa Ysabel waived its immunity in loan modification documents in 2008. In a legal brief responding to the lawsuit, Santa Ysabel said it did not waive immunity.

At issue is whether Santa Ysabel authorized its leader, then-Chairman Johnny Hernandez, to give up the tribe's sovereign immunity when he signed the loan modification documents, according to court documents.

Vanessa Verri, an attorney for Santa Ysabel, said Hernandez did not have the authority.

"Based on tribal law, the chairman didn't have the unilateral authority," Verri said.

Officials with the Yavapai tribe did not return calls for comment.
The Santa Ysabel tribe has struggled to compete with other larger gambling operations in the area. Its casino is in a remote area near Lake Henshaw.
Tribal leaders had hoped to capture weekend visitors to the mountain town of Julian.

The tribe is also about $3 million behind in payments owed to the county. Before the casino opened, the tribe struck an agreement with the county to help pay for emergency and law enforcement services but failed to make the necessary payments, county officials have said.

In court documents, attorneys for the Yavapai argued that the chairman received implied authority to waive sovereign immunity when negotiating terms to modify the original $30 million loan.

"On October 8, 2008, the First Legislature of the (Santa Ysabel tribe) authorized Johnny Hernandez Chairman of the Executive Branch to negotiate and execute amendments to the various casino loan documents in the best interest of the nation," according to the Yavapai's lawsuit against Santa Ysabel.

Santa Ysabel's attorneys argued that its laws require the tribe to take a vote before waiving sovereign immunity. A waiver cannot be implied or delegated to the chairman.

The case is under appeal by the Yavapai in the 4th District Court of Appeal after San Diego Superior Court Judge Randa Trapp sided with the Santa Ysabel tribe in a decision issued in October 2010.