

               United States Court of Appeals
                    For the First Circuit
                                        

No. 96-1670

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellee,

                             v.

                 KEY BANK OF MAINE, ET AL.,
                   Defendants, Appellees,
                                      

         JOHN PALMER, PALMER MANAGEMENT CORPORATION,
             AND PALMER DEVELOPMENT CORPORATION,
                         Appellants.
                                         

No. 96-1671

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellant,

                             v.

                 KEY BANK OF MAINE, ET AL.,
                   Defendants, Appellees.

                                       

No. 96-1672

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellee,

                             v.

                 KEY BANK OF MAINE, ET AL.,
                   Defendants, Appellees.
                                         

                        JOHN SCHIAVI,
                         Appellant.
                                         

No. 96-1736

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellee,

                             v.

                     KEY BANK OF MAINE,
                    Defendant, Appellant.

                                        

        APPEALS FROM THE UNITED STATES DISTRICT COURT

                  FOR THE DISTRICT OF MAINE

         [Hon. Morton A. Brody, U.S. District Judge]

                                        

                           Before

               Selya and Stahl, Circuit Judges,
               and Woodlock,* District Judge.

                                        

                        ERRATA SHEET

   Please make the following changes to the opinion issued on
May 5, 1997:

   On page 6, line 9, "May 1988" should read "May 1989"

   On page 6, the first full paragraph, lines 9-15, should
   be moved in its entirety to become the end of the
   paragraph that begins on line 16 (beginning "In April
   1989").  Specifically, it should be placed after the
   sentence that reads "As part of the liquidation plan,
   PIN and Palmer then assigned Schiavi Homes' assets to
   Key Bank."  It should not form a new paragraph, but,
   instead, should form the continuation of the paragraph
   that currently is at page 6, lines 16-19.  In addition,
   footnote marker 2 (currently located after "Key Bank."
   on page 6, line 19), should be moved to follow the
   sentence that reads "In May 1989, Key Bank notified PIN
   that it intended to exercise the purchase option
   contained in the Lease-Option Agreement."

   On page 17, line 15, replace brackets around
   [hereinafter "Indian fee lands"] with parentheses

No. 96-1670

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellee,

                             v.

                 KEY BANK OF MAINE, ET AL.,
                   Defendants, Appellees,
                                      

         JOHN PALMER, PALMER MANAGEMENT CORPORATION,
             AND PALMER DEVELOPMENT CORPORATION,
                         Appellants.
                                         

No. 96-1671

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellant,

                             v.

                 KEY BANK OF MAINE, ET AL.,
                   Defendants, Appellees.

                                       

No. 96-1672

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellee,

                             v.

                 KEY BANK OF MAINE, ET AL.,
                   Defendants, Appellees.
                                         

                        JOHN SCHIAVI,
                         Appellant.
                                         
No. 96-1736

                  PENOBSCOT INDIAN NATION,
                    Plaintiff, Appellee,

                             v.

                     KEY BANK OF MAINE,
                    Defendant, Appellant.

                                        

        APPEALS FROM THE UNITED STATES DISTRICT COURT

                  FOR THE DISTRICT OF MAINE

         [Hon. Morton A. Brody, U.S. District Judge]

                                        

                           Before

               Selya and Stahl, Circuit Judges,
               and Woodlock,* District Judge.

                                        

Peter J. Haley, with whom Stephen F. Gordon, Gordon &amp; Wise,
Ronald C. Caron, and Caron &amp; Sullivan,were on brief for appellant
Penobscot Indian Nation and third-party defendants-appellees, Gerald
Pardilla and Reuben Phillips.
Catherine R. Connors, with whom Debra Brown and Pierce Atwood,
were on brief for appellee and cross-appellant Key Bank of Maine.
Justin W. Leary, with whom Leonard I. Sharon and Sharon, Leary &amp;
Detroy, were on brief for appellee Michael Marcello.
Stephen B. Wade
 with whom Skelton, Taintor &amp; Abbott was on brief for defendants-
appellees and cross-appellants, John Palmer, Palmer Management Corp.,
and Palmer Development Corp.
Jeffrey A. Thaler with whom Berman &amp; Simmons, P.A. was on brief
for defendant-appellee and cross-appellant, John Schiavi.
Melissa A. Hewey with whom Drummond Woodsum &amp; MacMahon was on
brief for appellees Consumers Water Company, Burlington Homes of New
England, Inc., and SHC Corporation.
                                        
                         May 5, 1997
                                        

                
* Of the District of Massachusetts, sitting by designation.

          STAHL, Circuit  Judge.    Appellant,  a  federally-

recognized                       Indian                             tribe,                                    appeals the district court's denial of

its motion for declaratory judgment, pursuant to 25 U.S.C.  S

81, seeking to  invalidate several agreements concerning  the

purchase and operation of a mobile home business.   Appellees

cross appeal the district court's summary judgment ruling  in

favor                  of                     Appellant on several defamation counterclaims as well

as a breach of  contract and emotional distress  counterclaim

stemming from litigation involving  the failure of this  same

mobile home business.

                         Background

          Although                               the                                  district                                           court provided a cogent summary

of the facts and procedural history in its memorandum opinion

below, see Penobscot Indian Nation v. Key Bank, 906 F.  Supp.

13,                16-17                      (D.                         Me.                             1995),                                    the complexity of this case compels us

to sketch the necessary background information.

          In 1983, Consumers  Water Company ("CWC")  acquired

Schiavi Homes Corporation ("SHC"), a profitable Maine  mobile

home sales  business, from John  Schiavi ("Schiavi").   Under

CWC's ownership, SHC continued  to operate successfully.   In

1985, John Palmer ("Palmer") became SHC's new president.   In

August 1985,  Palmer and his  wife, Mary  Anna, also  founded

Palmer Development Corporation ("Palmer Development").   Like

SHC, Palmer Development engaged in the sale of mobile homes 

throughout Maine.

                             -3-

          In 1985, the Penobscot Indian Nation ("PIN")  hired

Tribal  Assets Management  ("TAM") to  locate, evaluate,  and

recommend potential investment opportunities.  Late in  1986,

TAM                identified SHC as a potential PIN investment and conducted

a              detailed                       analysis                               of                                  SHC's viability as a successful business

venture.    TAM  alerted PIN  that  SHC  constituted  a  good

investment possibility, but cautioned PIN that the success of

the                venture                        would                             depend                                    largely on PIN's willingness to invest

in new mobile home sites on which the mobile homes it sold to

retail  customers  could  be  located.    PIN  expressed  its

willingness                        to use its lands and invest its resources for such

purposes.

          On  December 31,  1986, PIN  and Palmer  Management

Corporation                        ("Palmer                                Management"), a corporation formed for the

purpose of purchasing  SHC, executed a Partnership  Agreement

creating                     Schiavi Homes ("Schiavi Homes" or "the Partnership"),

a Maine  limited partnership.   Pursuant  to the  Partnership

Agreement, PIN  became the  sole limited  partner and  Palmer

Management the sole general partner.1  PIN acquired a  ninety

percent                    interest in Schiavi Homes.  Palmer Management received

only a  ten percent share but  secured full control over  all

management decisions.

1.  Prior to the purchase, TAM informed PIN that Palmer had
been the president of SHC.  PIN also knew both that Palmer
and his wife owned Palmer Development and that Palmer
Development engaged in business activities similar to those
of SHC.

                             -4-                                          4

          Also on December 31, 1986, the Partnership executed

a              Purchase                       and Sale Agreement with SHC, which provided for the

Partnership's  purchase of  SHC's  assets  and  business  for

approximately $5  million.  Key  Bank of  Maine ("Key  Bank")

financed                     the                         purchase on the condition that Palmer retain full

management                       control over Schiavi Homes.  Key Bank also insisted

that                 PIN                     post a $1 million letter of credit to secure its loan

and agree  to restrictions on  the withdrawal  of funds  from

Schiavi Homes.

          As part  of its  purchase of  SHC, the  Partnership

secured three non-competition agreements.  CWC entered into a

non-competition agreement with Schiavi Homes and assigned  to

the Partnership its  interest in an existing  non-competition

agreement  with Schiavi,  which it  obtained at  the time  it

originally acquired  the business.   Palmer signed a  similar

agreement with the Partnership.

          Schiavi Homes  fared  poorly  from  its  inception.

Although sales of mobile  homes in Maine reached an all  time

high                 during                        this                            time,                                  by the end of 1987 Schiavi Homes' market

share had declined from eighteen to eight percent.  Over  the

course  of  its  three  year  existence,  PIN  made   several

investments                        in                          Schiavi                                  Homes in an attempt to buoy its business

fortunes.  Most significantly, in October 1987, PIN signed  a

Lease-Option  Agreement with  Schiavi Homes  leasing for  the

nominal fee of $1 per  year a twenty-four acre tract of  real

                             -5-                                          5

property                     (the                         "Holden                                 Lot") that PIN purchased during this same

 onth.                                       The                       Lease-Option                                    Agreement afforded the Partnership the

option            m       to  purchase  the  Holden  Lot  for  $100,000.    PIN

subsequently invested approximately  $135,000 to develop  the

Holden Lot  for purposes of the  Schiavi Homes business.   In

December 1988, with Schiavi Homes unable to make its  regular

monthly                    loan                         payment                                of                                   principal and interest to Key Bank, the

Partnership pledged the Lease-Option Agreement to Key Bank.

          In April 1989, acting on the advice of its counsel,

Bernstein,                       Shur, Sawyer &amp; Nelson ("Bernstein"), PIN decided to

liquidate                      Schiavi Homes.  As part of the liquidation plan, PIN

and Palmer then assigned Schiavi Homes' assets to Key Bank.

In               May                   1989,                        Key                            Bank                                 notified PIN that it intended to exercise

the purchase option contained in the Lease-Option Agreement.2

At               this                    time,                         Key                             Bank                                  also initiated three foreclosure actions

with respect to real property that the Partnership owned  and

encumbered                       with                           mortgage                                    deeds given to Key Bank in conjunction

with the initial financing of SHC's purchase.

          On  September  29,  1989,  PIN  entered  into   two

comprehensive                         Settlement Agreements with Schiavi, SHC, Schiavi

2.  
The Area Director of the Eastern Area Office of the Bureau of
Indian Affairs, George Big Eagle, approved the transfer of
the Holden Lot to Key Bank pursuant to Title IV of the Indian
Financing Act of 1974, 25 U.S.C. SS 1451-1543, which forbids,
without written consent, any transfer or disposal of a
project being improved with federal grant funds within three
years of the use of such funds.

                             -6-                                          6

Homes,                   Palmer,                          Palmer                                 Management, Key Bank, Burlington Homes of

New England3  ("Burlington  Homes"),  and  CWC  (collectively

"Appellees").  PIN,  Schiavi Homes,  Schiavi, Palmer,  Palmer

Management,  and  Key  Bank  executed  the  first  Settlement

Agreement ("first Settlement Agreement"); PIN, Schiavi Homes,

SHC, Palmer, Palmer Management, Key Bank, CWC, and Burlington

Homes  executed  the  second  Settlement  Agreement  ("second

Settlement                       Agreement").                                                                       The two agreements contained identical

language that served broadly to "release, remise and  forever

discharge"                       all                          claims                                 involving the signatories.  Subsequent to

the                signing                        of                          the                              two                                  Settlement Agreements, legal proceedings

deriving from the operation of Schiavi Homes ceased.

          The ensuing period of  calm ended on September  14,

1994,                  when                       PIN                          filed                                the                                    lawsuit underlying this appeal.  PIN's

suit stemmed from an  investigation of Key Bank's  activities

relating                     to                        Schiavi Homes that Penobscot County Deputy Sheriff

Carl Andrews conducted between approximately 1993 and  1994.4

3.  Burlington Homes of New England, a subsidiary of CWC,
manufactured mobile homes.  SHC, Schiavi Homes, and Palmer
Development all sold homes that Burlington manufactured.

4.  The record does not reveal the exact duration, scope, or
findings of the investigation.  Andrews testified that he
provided the Maine Attorney General's office with a three
page report summarizing his findings, but he did not divulge
the report's contents to PIN.  No party submitted this report
into evidence; in fact, it is not apparent from the record
that the results of the investigation were set out in writing
or were made known to the public.  It is clear, however, that
no criminal proceedings of any kind resulted from Andrews'
investigation.

                             -7-                                          7

PIN alleges that Andrews' investigation revealed  substantial

improprieties on the part of PIN's business associates in the

Schiavi Homes venture.  Also on September 14, 1994, PIN  held

two press  conferences,  one in  Bangor,  Maine, and  one  in

Portland, Maine,  to announce the  filing of  its lawsuit  in

federal  district  court.    Michael  Marcello,  PIN's  media

relations                      consultant,                                 prepared the statements that PIN Governor

Reuben Phillips and  PIN Lieutenant Governor Gerald  Pardilla

read at the two press conferences.  Marcello also distributed

the text of the statements to members of the media.

          PIN's                            complaint contained nine counts and named nine

defendants.  Most importantly for our purposes, the complaint

alleged that the two Settlement Agreements signed by PIN  and

the  Appellees were  void because  they did  not receive  the

Secretary of the Interior's approval pursuant to 25 U.S.C.  S

81.5  SHC filed a motion to dismiss PIN's claims.  Key  Bank,

Schiavi, Palmer, Palmer Development, Palmer Management,  CWC,

and Burlington Homes moved for summary judgment.

5.  PIN's complaint also alleged the following:  (1) breach
of duty of good faith and fair dealing (against Key Bank,
CWC, SHC, Burlington, Schiavi, Palmer, and Palmer
Management); (2) breach of contract (against Schiavi); (3)
misrepresentation (against CWC, SHC, Burlington, Schiavi, and
Palmer); (4) fraud (against Bernstein); (5) negligence
(against Bernstein); (6) breach of fiduciary duty (against
Key Bank, Palmer, and Palmer Management); and (7) RICO
violations (against Key Bank, CWC, Burlington, Bernstein,
Schiavi, Palmer, Palmer Management, and Palmer Development).

                             -8-                                          8

          Palmer, Palmer Development, Palmer Management  (the

"Palmer                    Defendants"),                                 Key Bank, and Schiavi filed counterclaims

against PIN for defamation and punitive damages based on  the

alleged defamation stemming from the September 14, 1994 press

conferences.   Key  Bank filed  counterclaims for  defamation

against Marcello, Phillips, and Pardilla.  Also deriving from

these                  press                        conferences, Palmer asserted counterclaims against

PIN  for intentional  and negligent  infliction of  emotional

distress.     Both   Palmer  and   Palmer  Management   filed

counterclaims                          against                                 PIN for breach of contract, alleging that

PIN's suit violated the  release contained in the  Settlement

Agreements.                                                 Only Marcello responded with a motion for summary

judgment.

          The district court  (Brody, J.)  concluded that  25

U.S.C. S  81  did not  apply  to the  Settlement  Agreements.

Determining that the Settlement Agreements constituted  valid

releases, the district court granted summary judgment for the

defendants                       with respect to all of PIN's claims.  See Penobscot

Indian                   Nation,                          906                              F.                                 Supp. at 20-21.  Treating SHC's motion to

dismiss as a motion for summary judgment, the district  court

separately granted  summary  judgment for  SHC based  on  the

binding                    nature                           of                             the                                 Settlement Agreements.  See id. at 21-22.

The district court also ruled that the statute of limitations

barred PIN's RICO claims.  See id. at 21.

                             -9-                                          9

          The                          district                                   court                                        then                                             considered the counterclaims.

Finding that Key Bank did not allege facts demonstrating even

      ence  on Marcello's  part, the  district court  granted

Marcello's                       motion                             for                                 summary judgment on Key Bank's defamation

    terclaim.                   neglig            coun            See id. at  23.  Despite  the fact that  only

Marcello filed  a motion for  summary judgment, the  district

court proceeded to grant summary judgment sua sponte for  PIN

and  the  remaining  cross-Appellees  with  respect  to   the

defamation                       claims.6  See id.  Judge Brody also awarded summary

judgment sua sponte for PIN and the other cross-Appellees  on

the punitive damage counterclaims.  See id. at 24.   Finally,

the district court granted PIN's motion for summary  judgment

with respect to the emotional distress and breach of contract

claims.                                         See                                                Penobscot Indian Nation v. Key Bank, Civ. No. 94-

0212-B (D. Me. Dec. 13, 1995).

          In  the spring  of 1996,  PIN's malpractice  claims

against Bernstein  went to  trial before  a jury.   The  jury

returned a verdict in favor of Bernstein.  The district court

then entered a final judgment resolving all claims on May  7,

1996.  These appeals ensued.7  

6.  The Palmer Defendants immediately filed a motion for
reconsideration, which the district court subsequently denied 
See Penobscot Indian Nation v. Key Bank, Civ. No. 94-0212-B,
1 (D. Me. Dec. 13, 1995).

7.  PIN did not appeal the adverse judgment respecting either
its RICO claims or its other claims against Bernstein. 
Cross-Appellants did not appeal the district court's sua
sponte ruling as to punitive damages.

                            -10-                                         10

                     Standard of Review

          The district court  must grant summary judgment  if

"the pleadings, depositions, answers to interrogatories,  and

admissions on file, together  with the affidavits . . .  show

that                 there                       is                         no                            genuine                                    issue as to any material fact and that

the                moving                       party                            is                               entitled to a judgment as a matter of law."

Fed. R. Civ. P. 56(c).  "On appeal from the entry of  summary

judgment we  review the  district court's  decision de  novo,

construing the record in the light most . . . [favorable]  to

the                non-movant and resolving all reasonable inferences in that

party's                    favor."  Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir.

1996).  We are not "wedded to the district court's reasoning.

Rather,                    '[w]e are free, on appeal, to affirm a judgment on any

independently sufficient ground.'"   Garside  v. Osco  Drugs,

Inc., 895 F.2d 46, 49 (1st Cir. 1990) (quoting  Polyplastics,

Inc.  v. Transconex,  Inc., 827  F.2d 859,  860-61 (1st  Cir.

1987)).    

                         Discussion

          This                           appeal                                 raises                                        several issues which we address in

turn.  We begin by resolving an issue of first impression  in

this Circuit:  whether  25 U.S.C. S 81 applies to  agreements

relative                     to                        lands that an Indian tribe purchases in fee simple

for investment  purposes.   We then  determine whether  PIN's

filing                   of                      this action in 1994 constituted an actionable breach

of contract.   Subsequently, we  decide whether the  district

                            -11-                                         11

court                  erred                       in                          concluding that the statements Marcello prepared

and  individual  PIN officials  announced  to  the  press  in

September 1994 did not amount to defamation.  Thereafter,  we

touch upon  the issue of whether  PIN's conduct at the  press

conferences  constituted  either  intentional  or   negligent

infliction                       of                         emotional                                   distress.  Finally, we evaluate whether

the                district                         court                              has                                  jurisdiction to hear the remaining state

law claims at issue in this case.

A.  Section 81

          PIN sought a declaratory judgment from the district

court that  the  agreements it  executed with  the  Appellees

necessitated  approval from  the  Secretary of  the  Interior

pursuant to 25 U.S.C. S  81.  Section 81 states in  pertinent

part:

          No agreement shall be made by any  person
          with any tribe  of Indians . . . for  the
          payment or delivery of any money or other
          thing  of   value,  in   present  or   in
          prospective,  or  for  the  granting   or
          procuring any  privilege to  him, or  any
          other person in consideration of services
          for                          said                               Indians relative to their lands .
          . . unless such agreement be executed and
          approved as follows:

                           . . . .

          It  shall  bear   the  approval  of   the
          Secretary  of   the  Interior   and   the
          Commissioner                                   of Indian Lands indorsed upon
          it.
                           . . . .

          All  contracts  or  agreements  made   in
          violation of this  section shall be  null
          and void . . . . 

                            -12-                                         12

Congress adopted S 81, originally Revised Statute S 2103,  in

1872.                                     To                      this day, Congress has not repealed S 81 and the few

amendments                       to                          its                             text                                  have been only technical.  See Altheimer

&amp;              Gray                   v.                      Sioux                           Mfg.                                Corp., 983 F.2d 803, 805 (7th Cir. 1993).8

          Section 81 dictates  that any agreement within  its

purview that is not approved by the Secretary of the Interior

("the Secretary") is void ab  initio.  PIN insists that S  81

applies                    not                        only to the two Settlement Agreements, but also to

the agreements  pertaining to the  creation and operation  of

Schiavi Homes, specifically the Asset Purchase Agreement, the

Partnership Agreement, and  the Lease-Option Agreement.   PIN

therefore                      reasons that the Settlement Agreements, the Purchase

and Sale  Agreement, and the  Lease-Option Agreement are  not

binding.   PIN also  contends that  the Secretary  improperly

determined  that  S  81 did  not  apply  to  the  Partnership

Agreement.

          Significantly, if the Settlement Agreements are not

valid because they  never received  the Secretary's  approval

pursuant to S 81, PIN may pursue its remaining claims against

the  Appellees.    If, on  the  other  hand,  the  Settlement

Agreements  do not fall  within the parameters  of S 81,  PIN

8.  In addition to technical amendments to S 81, Congress
passed the Indian Gaming Regulatory Act, 25 U.S.C. SS 2701-
2721, which provides in part:  "The authority of the
Secretary under section 81 of this title, relating to
management contracts regulated pursuant to this chapter, is
hereby transferred to the [National Indian Gaming]
Commission."  25 U.S.C. S 2711(h).

                            -13-                                         13

concedes that its remaining  non-S 81 claims fail due to  the

binding nature  of the Settlement  Agreements.  We  therefore

begin our analysis by evaluating the applicability of S 81 to

the Settlement Agreements.

          1.  Settlement Agreements  

          Without                              regard                                     to                                       S                                         81,                                             the two Settlement Agreements

constituted  valid  releases.    Both  Settlement  Agreements

provided  that  the  parties  "release,  remise  and  forever

discharge each other . . . from all suits . . .  at law or in

equity                   .                     .                      .                        which                              directly or indirectly relate[] to . . . any

. . . transactions . . . among each other."  Whether or not S

81               pertains                        to                          and                              thus                                   voids the Settlement Agreements depends

upon whether either  or both constitute an agreement with  an

Indian tribe for services  relative to Indian lands.  See  25

U.S.C. S 81.

               a.  Agreement with an Indian Tribe

          The Appellees contend that the Partnership,  rather

than                 PIN                     in                        its individual capacity, represents the applicable

entity  in this case.   This argument  is unavailing.   PIN's

Lieutenant                       Governor signed both Settlement Agreements as PIN's

personal representative,  not  as the  Partnership's  Limited

Partner.   John  Palmer, the  Partnership's General  Partner,

signed on behalf of Schiavi Homes.  Moreover, even if Schiavi

Homes,  not  PIN  in  its  individual  capacity,  signed  the

agreements, the district  court's observation that  "[c]ourts

                            -14-                                         14

look beyond  the  mere formality  of corporate  structure  in

construing  the identity  of parties  with regard  to S  81,"

Penobscot, 906 F. Supp. at 19, necessitates no elaboration on

our                part.                                             Se                        e Altheimer &amp; Gray, 983 F.2d at 809-10; Pueblo of

Santa Ana v. Hodel, 663 F. Supp. 1300, 1306 (D.D.C. 1987).

               b.  Services

          The  district  court  ruled  that  "the  Settlement

Agreements                       themselves                                 do                                    not constitute contracts for services.

The Settlement  Agreements rather pertain  to the release  of

legal claims  . . . ."  Penobscot, 906 F. Supp. at 20.   This

conclusion aptly  describes the  first Settlement  Agreement,

which made no reference to any service to be performed by any

party to the Agreement for any other party to the  Agreement.

The first Settlement Agreement, consequently, did not involve

services.

          The                          second                                 Settlement Agreement contains a provision

obligating                       Key                           Bank                               to                                  "jointly [with PIN] seek a purchaser for

the Holden Lot9 . . . at a price to be mutually agreed upon."

Because                    the                        Supreme Court has instructed that federal statutes

concerning                       Indian tribes must be construed "liberally in favor

of the Indians,"  Montana v. Blackfeet Tribe of Indians,  471

U.S. 759, 766 (1985), we assume for purposes of this  opinion

9.  At oral argument, PIN informed us that the Holden Lot
constitutes the sole tract of land at issue in this case,
and, thus, the only piece of Indian land to which S 81 could
apply.

                            -15-                                         15

that                 this                      provision                               in                                  the second Settlement Agreement entailed

a              "service"                        within the meaning of S 81, see Green v. Menominee

Tribe, 233 U.S. 558,  569 (1914) (finding S 81 applicable  to

sales contract); see also  Wisconsin Winnebago Bus. Comm.  v.

Koberstein                     ,                       762                           F.2d                                613, 619 (7th Cir. 1985) (applying S 81 to

management  contract); United  States  ex rel.  Citizen  Band

Potawatomi Indian Tribe v. Enterprise Management Consultants,

Inc.               ,                  734                      F.                         Supp. 455, 457 (W.D. Okla. 1990) (same), aff'd in

part and rev'd in part, 968 F.2d 22 (10th Cir. 1992); but see

United States ex rel. Harlan v. Bacon, 21 F.3d 209, 211  (8th

Cir. 1994) (determining  that lease agreement which  provided

that                 forty                       percent of produce deriving from use of leased land

be               delivered                         to tribe did not entail service within meaning of

S 81).

               c.  Relative to Indian lands

          The final prong  of the S 81 analysis, whether  the

Settlement Agreements  were  "relative  to  [Indian]  lands,"

presents a  more difficult  question.   The first  Settlement

Agreement is not relative to Indian lands because it  neither

pertained nor referred  to any land  whatsoever.  The  second

Settlement Agreement, however, both involved and referred  to

land that an  Indian tribe owned.   Specifically, the  second

Settlement                       Agreement                                provided for the disposition of the Holden

Lot.  At first glance, S 81 may appear to apply to the Holden

Lot because PIN, an Indian tribe, owned this parcel of  land.

                            -16-                                         16

We believe, however, that the meaning of S 81's language, the

intentions  of   its  drafters,   the  Interior   Secretary'

               of  S 81,  the case  law from  o-determinatio

                       e statute does not apply to the Holden                                                                        s            interpretation                                              n            support                    a                      holding                             that                                  th

Lot.  Although we have uncovered no precedent that explicitly

considers whether or not S 81 applies to land that an  Indian

tribe                  purchased                            in                              fee                                  simple for investment purposes, in doing

so now we  give voice to  an assumption underlying  virtually

every                  decision addressing the applicability of S 81 to service

agreements with Indian tribes relative to their lands.  

          We                         base                              our                                  conclusion primarily on the distinctions

between                    Indian                           trust                                or                                   tribal lands (hereinafter "Indian trust

lands")10 and  lands that Indian  tribes hold  in fee  simple

(hereinafter "Indian fee lands").   The phrase "Indian  trust

lands" derives from the historic trust relationship  existing

between Indian tribes and the federal government,  originally

described as "resembl[ing]  that of a ward to his  guardian."

Worcester v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831); see also

Oneida  County v.  Oneida Indian  Nation, 470  U.S. 226,  247

10.  We use the terms "Indian trust lands" and "Indian tribal
lands" interchangeably because we have not located any
authority that draws a distinction between these terms that
is material for our purposes.  See, e.g., Black's Law
Dictionary 772 (1990); Felix S. Cohen's Handbook of Federal
Indian Law 35-36, 476 (Rennard Strickland et al. eds., 1982);
Reid P. Chambers &amp; Monroe E. Price, Regulating Sovereignty: 
Secretarial Discretion and the Leasing of Indian Lands, 26
Stan. L. Rev. 1061, 1061 (1974) (referring to Indian lands
delineated "restricted" in 25 U.S.C. S 415 as "Indian trust
land"). 

                            -17-                                         17

(1985);                    United                          States                                                                v.                                    Sam Pelican, 232 U.S. 442, 447 (1914);

Joint                  Tribal                         Council of the Passamaquoddy Tribe v. Morton, 528

F.2d 370, 379 (1st Cir. 1975).  Indian trust lands constitute

real property the title  to which the United States holds  in

trust for an  Indian tribe.   See 25 U.S.C.  S 465; Felix  S.

Cohen's                    Handbook of Federal Indian Law 476 (Rennard Strickland

et al. eds., 1982) [hereinafter Cohen's Handbook].  

          Fee simple lands, by  contrast, are those lands  in

which the  owner "is entitled  to the  entire property,  with

unconditional power of disposition."  Black's Law  Dictionary

615                (6th                     ed.                         1990).  Federal law recognizes that Indian tribes

may hold certain lands in fee simple and that these lands may

not                be                   subject to the trust relationship between Indian tribes

and the  federal government.   See, e.g.,  25 U.S.C. S  1466.

Specifically,                         and pertinent to these appeals, the Maine Indian

Claims Settlement Act, 25 U.S.C. SS 1721-1735, indicates that

the Holden  Lot constitutes Indian  fee land  over which  the

federal                    government                              does                                   not have a trust responsibility because

the                Lot                    does                        not                            lie                                within designated PIN Territory.  In fact,

Congress expressly disavowed trust responsibility for  Indian

real                 property encompassing the area in which the Holden Lot is

situated.                    11                                                                       Accordingly, we find that PIN held the Holden Lot

11.  25 U.S.C. S 1724(d)(3) provides:  "Land or natural
resources acquired outside the boundaries of [Penobscot
Indian Territory] . . . shall be held in fee by the
respective tribe or nation, and the United States shall have
no further trust responsibility with respect thereto."  25

                            -18-                                         18

in fee simple.  We now  consider the impact this fact has  on

whether S 81 applies to the second Settlement Agreement.  

          This                           inquiry                                   necessitates that we first consider the

statute's text.   See United States  v. Gonzales, 117 S.  Ct.

1032, 1034 (1997).   As previously noted,  S 81 states:   "No

agreement                      shall                            be                              made                                   by any person with any tribe of Indians

. . . for the payment or delivery of any money or other thing

of               value,                      in                         present or in prospective, or for the granting or

procuring  any privilege  to  him,  or any  other  person  in

consideration of services for said Indians relative to  their

lands                  .                    .                      .                       ."                                                     The                               statute does not distinguish between Indian

trust lands and  Indian fee lands; nor  does it refer to  all

Indian lands.  In fact, S 81's scope is not clearly  defined.

See Mark A.  Jarboe, Fundamental  Legal Principles  Affecting

Business Transactions in Indian Country, 17 Harmline L.  Rev.

417, 430 (1994); see also Stowell v. Secretary of Health  and

Human  Servs., 3 F.3d  539, 542 (1st  Cir. 1993) ("Given  two

plausible alternatives, and recognizing that the universe  of

interpretive                         possibilitie                                   s may extend beyond them, we think the

U.S.C. S 1722(j) defines Penobscot Indian Territory as "those
lands as defined in the Maine Implementing Act."  The Maine
Implementing Act defines Penobscot Indian Territory as the
Penobscot Indian Reservation and "[t]he first 150,000 acres
of land acquired by the secretary for the benefit of the
Penobscot Nation" as further defined in this section.  Me.
Rev. Stat. Ann. tit. 30, S 6205(2)(B) (1993).  The Holden Lot
does not fall within either the Penobscot Indian Reservation
or the remaining area that S 6205(2)(B) designed as current
or potential Penobscot Indian Territory. 

                            -19-                                         19

statute contains an undeniable ambiguity.").

          Section 81's  lack of  clarity and  its failure  t

                                                    Smith                                                                        o            define the phrase "Indian lands" requires us to determine the            "ordinary or natural" meaning  of these terms.  See        v.

United States, 508 U.S.  223, 228 (1993).  When Congress  has

failed to  define statutory language,  the Supreme Court  has

resorted  to authoritative  texts to  determine the  ordinary

meaning of statutory language.  See id. at 229.  According to

one  such text,  the term  "Indian lands"  refers to  "[r]eal

property ceded to the U.S. by Indians, commonly to be held in

trust                  for                      Indians."                                                               Blac                                   k's Law Dictionary 771 (6th ed. 1990).

The definition of  Indian tribal or  trust land is  virtually

identical:  "real propt 772.12

          In the  context of S  81, the  phrase "relative  to

[Indian] lands" is understood to refer to Indian trust lands.

See Cohen's Handbook at 318 n.293 (explaining that "25 U.S.C.

S 81[] prohibit[s]  contracts with  Indian tribes  concerning

trust property unless approved by the Commissioner of  Indian

affairs") (emphasis  added);  Patrick K.  Duffy and  Lois  A.

12.  It is noteworthy that the phrase "Indian country" refers
to "all lands set aside by whatever means for the residence
of tribal Indians under federal protection, together with
trust and restricted Indian allotments."  Cohen's Handbook at
34; see also United States v. John, 437 U.S. 634, 648-50
(1978).  The phrase "as Indian lands are held" is read
"simply to state the United States will hold title in trust
for the tribe."  Cohen's Handbook at 476.  These definitions
would seem to indicate that "Indian country" and "Indian
lands" encompass Indian trust lands but not Indian fee lands.

                            -20-                                         20

Lofgren,  Jurassic  Farce:    A  Critical  Analysis  of   the

Government's Seizure of "Sue," A  Sixty-Five-Million-Year-Old

Tyrannosaurs                         Rex                            Fossil,                                    39 S. D. L. Rev. 478, 528 n.169 (1994)

(indicating                        that                            pursuant to S 81, the Secretary "has oversight

responsibility  for  approving  or  vetoing  the  terms   and

conditions                       of                         all                             contracts involving Native American tribal or

trust  property") (emphasis  added).   No authority  directly

states  that  S  81 applies  to  Indian  fee lands.    It  is

understood,                        however,                                that by adopting S 81 "Congress prohibited

most contracts between  non-Indians and tribes  . . .  unless

approved                     by                        the Secretary of the Interior and the Commissioner

of Indian Affairs."  Cohen's Handbook at 143.  Thus, although

it appears that S 81's "relative to [Indian] lands"  language

connotes Indian trust lands rather than Indian fee lands,  we

acknowledge that this interpretation is not iron-clad.

          Recognizing that we cannot end our inquiry with the

"ordinary" or  "natural" meaning of  the statute's terms,  we

consider                     the                         relevant legislative history in an effort to give

effect  to the  intentions of  the statute's  drafters.   See

Griffin                                      v.                       Oceanic                              Contra                                   ctors, Inc., 458 U.S. 564, 571 (1982);

United States ex rel. S. Prawer &amp; Co. v. Fleet Bank, 24  F.3d

320,  327  (1st  Cir.  1994);  Federal  Election  Comm'n   v.

Massachusetts Citizens for  Life, Inc., 769 F.2d 13, 17  (1st

Cir. 1985),  aff'd, 479  U.S. 238  (1986).   This inquiry  is

particularly                         appropriate in the context of federal Indian law.

                            -21-                                         21

The Supreme Court has made it clear that "Indian law[] cannot

be interpreted in isolation but must be read in light of  the

common notions  of the day and  the assumptions of those  who

drafted [such law]."  Oliphant v. Suquamish Indian Tribe, 435

U.S.                 191,                      206                         (1978);                                 see                                    also Central Machinery Co. v. Arizona

State Tax Comm'n,  448 U.S. 160, 166 (1980) (explaining  that

courts must  "interpret [certain  federal statutes  involving

Indian tribes] .  . . in light  of the Congress that  enacted

them").

          Congress                               "intended                                        [S                                           81] to protect the Indians from

improvident                        and unconscionable contracts."  In re Sanborn, 148

U.S. 222,  227 (1893); see also  Cong. Globe, 41st Cong.,  3d

Sess. 1483, 1483  (daily ed. Feb.  22, 1871) (declaring  that

statute was for Indians' "protection and to prevent them from

being plundered") (comments of Senator Davis).  Specifically,

Congress adopted S 81 to protect Indian tribes and individual

Indians                    from                        persons,                                 particularly attorneys and claims agents,

offering  dubious services,  typically the  assertion of  the

Indians' land claims against the government, in exchange  for

enormous fees.  See Cong. Globe, 41st Cong. at 1483-86.   One

senator  indicated that  this section  "would prevent  . .  .

contracts                      being made by [Indian tribes] unless approved by the

Secretary                      of                        the                            Interior in any matter relating to the land or

annuities  that they  hold under  or derive  from the  United

States."   See Cong. Globe, 41st  Cong. at 1486 (comments  of

                            -22-                                         22

Senator Harlan) (emphasis  added).  Another senator  declared

that S 81 "is limited  to such agreements or services as  are

made                 or                   rendered                            relative to the lands of the Indians or to any

claim against  annuities  from or  treaties with  the  United

States."                                           Id.                         (comments of Senator Casserly) (emphasis added).

          Evidence                               of                                  the drafters' assumptions and intentions

does little to resolve whether or not the phrase "relative to

[Indian] lands" pertains to both Indian trust land and Indian

fee lands,  or solely  to  the former.   The  two  statements

addressing the application  of S 81 may be read  differently:

Senator Harlan's description  may indicate  that the  statute

applies solely  to lands  over which  the federal  government

exercises   a  trust   responsibility;   Senator   Casserly's

explanation may mean that the statute applies to Indian lands

generally.                                               To reconcile this ambiguity, and thus to parse the

ordinary meaning of S 81 at the time of its ratification,  we

consider the understanding of the status of Indian lands that

prevailed at the time Congress passed S 81.13  See  Oliphant,

13.  Our determination to further consider the nature of
Indian land ownership during this time in order to properly
interpret the phrase "relative to [Indian] lands" would be
appropriate even if we read Senator Harlan's statement in the
disjunctive, rather than in the conjunctive as the sentence
was recorded.  That is, if we read the phrase "relating to
the land or annuities that they hold under or derive from the
United States" so that the qualifying statement "that they
hold under or derive from the United States" qualifies only
the word "annuities" but not the words "the land," we still
would have learned little more concerning the definition of
"Indian lands."  Such a reading, though tortured, would
resolve the ambiguity between the drafters' two statements

                            -23-                                         23

435 U.S. at 206.

          In 1872,  when Congress  passed S  81, federal  law

provided that Indian tribes enjoyed the right to possess  and

occupy  lands but  not to  alienate these  lands without  the

federal government's approval.   See Johnson v. M'Intosh,  21

U.S.                 (8                    Wheat.) 543, 574 (1823) (indicating that United States

possessed                      title                            to                              all                                  Indian lands "subject only to the Indian

right                  of                    occupancy");                                 Uni                                   ted States v. Cook, 86 U.S. (19 Wall.)

591,                 592-94                        (1873) (explaining that Indians enjoyed only right

of occupancy  in Indian lands  and that "the  fee was in  the

United States"); David H.  Getches and Charles F.  Wilkinson,

Federal Indian  Law 161 (1986)  ("The United  States had  the

exclusive  right to  purchase or  extinguish Indian  title.")

[hereinafter  Federal  Indian   Law].    Memorializing   this

conception of Indian  real property rights, Congress  adopted

general, comprehensive legislation  addressing the rights  of

Indian tribes with  respect to their  lands during this  era.

See              ,                 e.g.                    ,                      Nonintercourse                                    Act of 1834, R.S. S 2116 (codified as

25               U.S.C.                      S                       177)                            (prohibiting "purchase, grant, lease, or other

conveyance                       of                         lands                             ,                                or                                   of any title or claim thereto, from any

Indian  nation or  tribe  of  Indians")  (emphasis  added).14

and would tend to point to a broader definition of the terms
"Indian lands," but it would not dispose of our inquiry into
the meaning of the phrase "relative to [Indian] lands."

14.  It was not until the legal relationship between Indian
tribes and the federal government evolved dramatically in the
twentieth century that legislation regulating Indian tribes'

                            -24-                                         24

Congress did not distinguish  between Indian trust lands  and

Indian fee lands at  this time presumably because it did  not

contemplate that Indian tribes could hold land in fee simple.

          During this time, however, Congress did provide for

individual Indians to hold land in fee simple.  See 25 U.S.C.

SS 348-349 (1887).  The allotment process that these statutes

authorized permitted the  Secretary to transfer certain  real

property to individual Indians.  Typically, the United States

would hold such lands in trust for the designated individuals

for a period of twenty-five years.  See Sam Pelican, 232 U.S.

at 447.  The Secretary, at his discretion, could "cause to be

issued                   to                      such allottee a patent in fee simple, and thereafter

all restrictions as to sale, incumbrance, or taxation of said

land shall  be removed."   25 U.S.C.  S 349.   Despite  these

statutes'  provision  for  individual  Indians'  fee   simple

ownership of real property, we have unearthed no  legislation

real property routinely distinguished between restricted and
unrestricted tribal lands.  See, e.g., 28 U.S.C. S 1360(b)
(1953) (referring specifically to the "alienation,
encumbrance, or taxation of any real or personal property . .
. that is held in trust by the United States or is subject to
a restriction against alienation imposed by the United
States"); 25 U.S.C. S 415 (1955) (referring specifically to
"restricted Indian lands").  Modern statutes routinely
distinguish between Indian trust lands and Indian fee lands. 
See, e.g., 25 U.S.C. S 1724(d)(3) (1980) (distinguishing
between Indian trust lands and Indian fee lands, and
indicating that the United States does not have "trust
responsibility" with respect to the latter); 25 U.S.C. S 1466
(1974) (indicating that Indian tribes can purchase real
property "without any restriction on alienation, control, or
use").

                            -25-                                         25

enacted                    during                           this                               time                                    that afforded similar rights to Indian

tribes.  See Cohen's Handbook at 36 &amp; n.78.

          Interpreting S 81  and its  legislative history  in

light of  the  understandings and  assumptions of  those  who

drafted it, see Oliphant, 435 U.S. at 206, thus supports  the

conclusion                       that S 81 does not pertain to the Holden Lot.  When

Congress passed S 81  it did not envision that Indian  tribes

could hold land in the  manner that PIN held the Holden  Lot.

Cf. Cohen's Handbook at  127-43 (concluding that during  this

time                 "extensive government supervisory power over the everyday

life of  Indians was essentially  unchecked").  It  therefore

would  seem  anomalous, in  endeavoring  to  give  effect  to

Congress' intent, to apply S 81 to lands PIN purchased in fee

simple for investment purposes.

          Admittedly, the broad remedial purposes that S 81's

drafters  attributed  to  the  statute  may  complicate  this

analysis.   Congress desired  to protect  Indian tribes  from

unscrupulous                         business practices, see Cong. Globe 41st Cong. at

1485-86, and enjoyed  the sole right  to encumber all  Indian

lands, see Oneida Indian Nation v. County of Oneida, 414 U.S.

661,                 667                     (1974) ("Once the United States was organized and the

Constitution                         adopted                                 .                                  .                                    . tribal rights to Indian lands became

the exclusive  province of the  federal law.   Indian  title,

recognized                       to be only a right of occupancy, was extinguishable

only  by  the  United States.").    It  may  seem  plausible,

                            -26-                                         26

therefore, that S 81 should apply to agreements for  services

relative                     to                        all                           Indian                                  lands.  Congress, moreover, occasionally

did                authorize individual Indians to hold designated parcels of

real property  in  fee  simple, and,  therefore,  could  have

exempted these fee simple lands from S 81's purview if it did

not                want                     S                       81 to apply to Indian fee lands.  To our knowledge,

Congress has adopted  no such exemption.   Our analysis  thus

illustrates  that  although   S  81's  legislative   history,

considered                       in light of the status of federal Indian law during

the                middle                       of the nineteenth century, points to the conclusion

that S 81  does not apply  to Indian fee  lands, it does  not

provide a clear answer to the issue we face today.

          Having                             failed                                    to                                      arrive                                             at a definitive answer to our

inquiry  through  reference  to  S  81's  plain  meaning  and

legislative history, we turn to analyze the interpretation of

the agency  responsible for administering  the statute.   See

Chevron U.S.A., Inc.  v. Natural  Resources Defense  Council,

Inc.               ,                  467                      U.S.                          837,                               843                                   (1984).  Although we have not unearthed

a general interpretation of S 81 advanced by the Secretary of

the  Interior,  in  this  case  the  parties  submitted   the

Partnership Agreement for the Secretary's approval.  The Area

                            -27-                                         27

Director of the Eastern  Area Office of the Bureau of  India

          stated:                                                                        n            Affairs15

          The  Secretary has  determined  that  the
          Agreement does not encumber trust land or
          other trust assets, that the Agreement is
          not                          subject                                  to the provisions of 25 U.S.C.
          S 81 (1982), and  that, as a result,  the
          Nation has contractual capacity to  enter
          into this  Agreement  without  additional
          Secretarial approval.

Declaration of B. D. Ott, Area Director, Eastern Area Office,

Bureau of Indian Affairs (December 31, 1986).

          This declaration  illustrates that  in  determining

whether or not an agreement with an Indian tribe falls within

the                parameters                           of                             S                               81,                                   the Secretary focuses on whether or not

the agreement relates to  Indian trust lands or assets.   See

also B arona Group  of the  Capitan Grande  Bande of  Mission

Indians v.  American Management &amp;  Amusement, Inc., 840  F.2d

1394, 1404-05 (9th Cir. 1987) (quoting Acting  Superintendent

for  Southern California  Bureau  of  Indian  Affairs  office

explaining that S 81 does not apply if "trust lands and funds

are  not involved").   In  this case,  the second  Settlement

Agreement did  not  involve  Indian trust  lands  or  assets.

Although the administrative agency's interpretation does  not

15.  The Secretary of the Interior's duties pursuant to the
text of S 81 subsequently have been delegated to the
appropriate Area Director of the Bureau of Indian Affairs. 
See Reorganization Plan No. 3 of 1950, 5 U.S.C. S 903(a)(5) &amp;
note; Order of the Secretary of the Interior, Nos. 3150 &amp;
3177, Amend. No. 3 (Dec. 16, 1996); 10 B.I.A.M. Bulletins 13,
9409, &amp; 9602.

                            -28-                                         28

function                     to                       conclusively                                    resolve our evaluation of whether S 81

pertains to the second  Settlement Agreement, see Stowell,  3

F.3d at 544; American  Management, 840 F.2d at 1405, we  must

afford                   it                      considerable deference, see Chevron U.S.A., 467 U.S.

at 843;  Strickland  v. Commissioner,  Maine Dep't  of  Human

Servs., 96 F.3d 542, 547 (1st Cir. 1996).

          Judicial interpretation  of S  81 provides  further

guidance.                                             See                                                  Securities                                    Indus. Ass'n v. Board of Governors of

Fed. Reserve Sys., 839 F.2d 47, 49 (2d Cir. 1988) (explaining

that in determining reasonableness of administrative agency's

interpretation of  statute,  court should  consider  judicial

construction)                        .  Courts generally have focused on the existence

of               Indian                      trust                           land                                in                                   evaluating S 81's "relative to [Indian]

lands"                   component.  In Koberstein, 762 F.2d at 619, the Seventh

Circuit  explicitly stated  that  S  81 applied  to  a  bingo

management agreement  because "S  81 applies  to Indian  land

transactions                         concerning                                   their tribal trust property." (emphasis

added).  See also Pueblo of  Santa Ana, 663 F. Supp. at  1306

(finding S 81 applicable to agreement because it provided for

construction  and operation  of  facility  on  "tribal  trust

property") (emphasis  added); Enterprise  Management, 734  F.

Supp.                  at                     457                        (voiding                                 bingo management agreement providing non-

Indian party exclusive right to operate bingo games on Indian

trust lands  because this agreement  was "relative to  Indian

lands and . . . thus governed by section 81").

                            -29-                                         29

          The Ninth Circuit in particular has manifested  the

importance                       that                           the                               presence of Indian trust lands plays in the

"relative                      to                         [Indian] lands" analysis.  In A.K. Management Co.

v. San Manuel Band of Mission Indians, 789 F.2d 785, 786 (9th

Cir. 1986), the Ninth Circuit considered the applicability of

S              81                 to                   a                     bingo                           management contract that the San Manuel Band of

Mission  Indians executed  with a  bingo management  company.

Upholding the district court's grant of summary judgment, the

court                  held                       "that                            the                                instant Agreement is 'relative to [Indian]

lands' under 25 U.S.C. S 81."  Id. at 787.  In  reaching this

conclusion, the court reasoned that "the Agreement gives  the

non-Indian contracting party . . . the express right to build

and control the  operation of the  bingo facility located  on

tribal                   trust                         lands and prohibits the Band from encumbering the

land."  Id. (emphasis added).

          One year later, in American Management, 840 F.2d at

1404, the  Ninth  Circuit again  determined that  a  contract

between an  Indian tribe  and a  non-Indian bingo  management

company                    providing                             for                                 the construction and operation of a bingo

facility on  Indian trust  lands was  "'relative to  [Indian]

lands' under section 81."  The court specifically stated that

it               reached                       this conclusion despite the fact that the agreement

neither afforded the non-Indian party exclusive control  over

the                bingo                      facility                              nor                                  abridged the tribe's ability to encumber

its trust lands.  See id.  The fact that the non-Indian party

                            -30-                                         30

exercised  some control  over  Indian  trust  lands,  however

minimal, proved decisive  to the American Management  court's

analysis.                                             See                                                  id.                            ;                               see                                                                    a                                   lso United States ex rel Yellowtail v.

Little Horn State Bank, 828 F. Supp. 780, 787 (D. Mont. 1992)

("The only interest the government has in overseeing  certain

contracts and agreements with Indians flows from its duty  as

trustee  of  tribal  resources.  . .  .  The  nature  of  the

government's  interest is  in  the  Tribe's  trust  resources

'relative                      to                        the                            land.'"), aff'd, 15 F.3d 1095 (9th Cir. 1994).

          The  most   recent   circuit  court   decision   to

specifically                         address                                the                                    "relative to [Indian] lands" component

of S  81,  Altheimer &amp;  Gray, 983  F.2d at  808-12, offers  a

slightly  different  construct  that  further  supports   the

conclusion                       that                           the                               second Settlement Agreement in this case is

not  "relative  to [Indian]  lands."    The  Altheimer  court

considered a  Letter of  Intent that  a federally  recognized

Indian                   tribe,                          in                            the                                form of a wholly owned tribal corporation,

executed  with an  Illinois  corporation  providing  for  the

manufacture of latex medical products on tribal trust  lands.

See id . at  806-07.   Although manufacture  of the  products

actually                     commenced,                               the                                   parties failed to execute the necessary

contracts.                                               Operations thus ceased shortly after commencement.

The                Illinois                        corporation                                    sued the tribal corporation for breach

of contract.  The  district court found the Letter of  Intent

void  pursuant to S  81 and granted  summary judgment to  the

                            -31-                                         31

tribal    corporation.        See    id.    at   806-07.     

          The                          Seventh                                 Circuit                                         reversed the district court.  See

id             .                at                   815.                                                In                           so                              doing, the court set forth four factors that

it considered  determinative of whether  or not a  management

contract is "relative to [Indian] lands" pursuant to S 81: 

          1)  Does the contract relate to the management 
          of a facility to be located on Indian lands?  
          2)  If so, does the non-Indian party have the 
          exclusive right to operate that facility?  
          3)  Are the Indians forbidden from encumbering 
          the property?  4)  Does the operation of the 
          facility depend on the legal status of an Indian 
          tribe being a separate sovereign?

Id.  at 811.   Despite  the fact  that the  Letter of  Intent

involved                     the                        operation                                  of a facility on Indian trust lands, the

Altheimer                                          court found that it was not relative to Indian lands

and thus not within the purview of S 81.  The Seventh Circuit

emphasized the fact that the non-Indian contracting party did

not  have exclusive  control of  the facility  and that  "the

business derived  no  special benefit  from its  location  on

Reservation land."  Id. at 812.

          Considering the present case in light of  Altheimer

compels                    two                       initial                               observations.  First, the second Settlement

Agreement obviously did not constitute a management contract.

Second, importing the precise considerations pertinent to  an

evaluation  of a  management contract  to an  analysis of  an

agreement  to assist  in locating  a purchaser  for land  may

present                    certain difficulties.  See id. at 811 (indicating that

                            -32-                                         32

the                four                     factors that it set forth "are not the 'sine qua non'

of a contract which relates to Indian lands").

          Despite                              its                                  distinguishing characteristics, however,

Altheimer                                          informs our analysis of PIN's appeal.  Specifically,

the                Altheimer                         court refused to find the agreement "relative to

[Indian] lands" in part because the Indian tribe in Altheimer

remained                     involved in the business relationship.  In this case,

PIN  participated  in  the  Partnership,  not  through  daily

management                       duties,                              but                                  through financing and leasing activities

promoting  Schiavi   Homes'   business  activities.      More

importantly, Altheimer emphasized  the fact that the  subject

matter of the  contract derived no  special benefit from  the

Indian  tribe's sovereign  status.   See  id.  at 812.    The

Altheimer court explained:   "Unlike bingo, manufacturers  of

latex medical products need not seek refuge from state  civil

laws by locating on a reservation."   Id.  In this case,  the

parties to the second Settlement Agreement derived no special

benefit from PIN's sovereign status.16

          Notwithstanding the fact  that Altheimer, like  the

other cases we have considered, supports the conclusion  that

16.  We note that when the land at issue constitutes Indian
fee land it is difficult for the subject matter of the
contract to derive a special benefit from the Indian tribe's
sovereignty because Indian tribes do not have the same powers
and privileges with respect to Indian fee lands that they do
in the context of Indian trust lands.  See Narragansett
Indian Tribe v. RIBO, Inc., 686 F. Supp. 48, 50 (D.R.I.
1988), aff'd on other grounds, 868 F.2d 5 (1st Cir. 1989);
Cohen's Handbook at 232-57.

                            -33-                                         33

the second  Settlement  Agreement does  not fall  within  the

purview of S 81, we consider one additional case in which the

district court for the district of Rhode Island interpreted S

81's  "relative  to   [Indian]  lands"   requirement.     See

Narragansett Indian Tribe v. RIBO, Inc., 686 F. Supp. 48,  51

(D.R.I. 1988), aff'd on  other grounds, 868 F.2d 5 (1st  Cir.

1989).                                       The                        N                        arragansett court considered S 81's applicability

to               two                   management agreements "contemplating acquisition by the

Tribe of property on which a high stakes bingo hall could  be

constructed."   See id.  at 49.   Following execution of  the

agreements, the Tribe purchased a total of 28.8 acres of land

adjacent to  the Tribe's reservation.   See id.  at 50.   The

Tribe, however, failed to secure trust status for this  land.

See id.

          The                          Narragans                                  ett defendants specifically argued that

"S 81 pertained only to 'tribal  land' . . . [that is,]  land

that is part of the Tribe's reservation."  Id.  The  district

court rejected this argument, reasoning:

          [S]uch a  construction  proves to  be  at
          variance with both the plain language  of
          the statute and  with its broad  remedial
          purpose.  Thus the statute uses the  term
          'their  [the  Indians']  lands'   without
          differentiating between  original  tribal
          lands and  those  subsequently  acquired.
          Reading into  those words the  limitation
          urged by  Defendants would distort  their
          plain meaning.   Moreover, it also  would
          emasculate the statute and frustrate  its
          purpose  of  providing  a  mechanism   to
          regulate Indian land transactions.

                            -34-                                         34

Id.                                               Although the Narragansett court recognized that S 81 "has

its origin in the longstanding trust relationship between the

federal                    government and Indian tribes," id. at 50, it held that

"S 81 renders both the agreements and the notes and mortgages

given by  the Tribe in accordance  with their terms null  and

void."  Id. at 51.

          We   find  the   Narragansett   court's   reasoning

unpersuasive.    The   construction  that  the   Narragansett

defendants  advanced, we  believe,  comports with  the  plain

language of the statute.  If S 81 is predicated on the  trust

relationship between the  federal government  and the  Indian

tribes, see  id.; United States ex  rel. Hall v. Tribal  Dev.

Corp.                ,                   49                     F.3d                          1208,                                1214 (7th Cir. 1995), then reading S 81 to

apply to Indian  lands purchased in  fee simple for  business

reasons contradicts the  statute's purpose and its  drafters'

intentions.  Even  those courts that have propounded a  broad

reading of  S 81's  "relative to  [Indian] lands"  component,

moreover,                      have not found that this phrase refers to Indian fee

lands.  See, e.g., Koberstein, 762 F.2d at 619; United States

ex rel Shakopee v. Pan American Mgmt. Co., 616 F. Supp. 1200,

1217-18  (D.  Minn.  1985)  (finding  that  "the   management

agreements [were] . . . inextricably tied up in the  property

rights flowing from the establishment of the bingo operations

on               tribal                      trust                           lands")                                   (emphasis added).  We thus find that to

the extent Narragansett can  be read to hold that Indian  fee

                            -35-                                         35

lands purchased for investment purposes and not designated as

trust                  lands                        qualify as "Indian lands" under S 81, that holding

is not compelling.

          To                         reach                               a                                different                                          conclusion in the context of the

Holden  Lot would defy  common sense.   See United States  v.

Carroll, 105 F.3d 740, 744 (1st Cir. 1997) (instructing  that

common sense construction  that "avoid[s] absurd or  counter-

intuitive results" is favored); O'Connell v. Shalala, 79 F.3d

170,                 176                     (1st Cir. 1996) (explaining that "courts are bound to

afford statutes a practical, common-sense reading").  Were we

to hold  that the  second Settlement  Agreement required  the

            pproval pursuant to S 81 despite the fact that it                              17            Secretary's                        a

relates only  to  Indian  fee lands  purchased  for  business

reasons, we  would force the  Secretary to  exercise a  trust

responsibility  with respect  to  lands over  which  Congress

specifically                         disavowed any further trust obligation.18  See 25

17.  Perhaps recognizing the Narragansett decision as an
anomaly, at least one circuit court has interpreted
Narragansett as "simply hold[ing] that bingo management
agreements involve services within the meaning of [S 81]." 
Bacon, 21 F.3d at 212.

18.  We recognize that the Supreme Court determined that the
Nonintercourse Act, 25 U.S.C. S 177, applied to land that the
Pueblo Indian tribes of New Mexico held in fee simple.  See
United States v. Candelaria, 271 U.S. 432, 440-44 (1926); see
also United States v. Sandoval, 231 U.S. 28, 45-48 (1913)
(finding that Congress could restrict the alienation of land
that New Mexico Pueblo Indians held in fee simple).  The
Pueblo Indians at issue in Candelaria and Sandoval held their
lands in fee simple under both Spanish and Mexican law before
the United States gained control over New Mexico.  See
Candelaria, 271 U.S. at 442; Sandoval, 231 U.S. at 44-45. 

                            -36-                                         36

U.S.C. S 1724(d)(3);  25 U.S.C. 1722(j); Me. Rev. Stat.  Ann.

lands.              tit. 30, S 6205(2)(B) (1993).                      In the Maine Indian Claims Settlement Act, Congress            not only disavowed further trust responsibility over the area            First the Spanish and then the Mexican authorities, however,                        Candelaria                   Sandoval, 231 U.S.
at 44-45.  We believe that the situation in this case, in
which PIN purchased land in fee simple for investment
                                                  Candelaria                    See            retained the authority to restrict the alienation of these                                  , 271 U.S. at 442;             purposes, differs substantially from that in both 
and Sandoval, in which the tribes held their ancestral tribal
lands in a modified version of fee simple under Spanish and
Mexican rule.       We note, however, that several courts,
relying on Candelaria and Sandoval, have found S 177
applicable to lands that other Indian tribes have purchased
in fee simple.  See Alonzo v. United States, 249 F.2d 189,
196 (10th Cir. 1957); United States v. 7,405.3 Acres of Land,
97 F.2d 417, 422 (4th Cir. 1938).  Given Alonzo's paucity of
analysis and outdated paternalism (the court adopted the
notion that Indians are "'a simple, uninformed people, ill-
prepared to cope with the intelligence and greed of other
races,'" see id. (quoting Candelaria, 271 U.S. at 442)), we
do not find this decision persuasive.  This conclusion
applies equally to 7,405.3 Acres of Land.    
          The situation in this case, moreover, differs
substantially from that in Alonzo and 7,405.3 Acres of Land. 
As opposed to the land in question in those cases, Congress
disavowed trust responsibility over the land encompassing the
Holden Lot.  See 25 U.S.C. S 1724(d)(3).  In Lummi Indian
Tribe v. Whatcom County, 5 F.3d 1355, 1359 (9th Cir. 1993),
the Ninth Circuit took issue with Alonzo and 7,405.3 Acres of
Land and ruled that "parcels of land approved for alienation
by the federal government and then reacquired by the Tribe
did not then become inalienable by operation of the
Nonintercourse Act."  See also Federal Power Comm'n v.
Tuscarora Indian Nation, 362 U.S. 99, 110-15 (1960)
(determining that lands that Indian tribe purchased in fee
simple were not subject to federal oversight pursuant to
Federal Power Act, 16 U.S.C. S 797(e), because United States
neither owned these lands nor owned an interest in these
lands).  The lands at issue in Lummi Indian Nation and
Tuscarora Indian Nation were similar to the Holden Lot in
that the tribes purchased these lands in fee simple.  See
Lummi Indian Tribe, 5 F.3d at 1357; Tuscarora Indian Nation,
362 U.S. at 105-06. 

                            -37-                                         37

encompassing the  Holden Lot,  it expressly  stated that  the

p

    as its  source the Nonintercourse  Act, meaning that  th

trust relationship pertains to land transactions which are or

                             Passamaquoddy Tribe            N            See 25 U.S.C. S  1724(g)(1).  This is significant because  we             reviously                       have indicated that "the 'trust relationship' . . .            has                                                         e            may be covered by the Act."                     , 528 F.2d at

379.                                   Because                         the                             Nonintercourse Act no longer pertains to PIN,

Passamaquoddy Tribe dictates that the federal government does

not have a trust  obligation with respect to the Holden  Lot.

See                                        Imposing  such                onintercours                        e Act, 25 U.S.C. S 177, no longer applied to PIN.                                 also  25  U.S.C.  S  1724(d)(3).19                     a

responsibility pursuant to  S 81 would  defy not only  common

19.  Key Bank urges us to rule that the Maine Indian Claims
Settlement Act, 25 U.S.C. SS 1721-1735, implicitly repealed S
81 with respect to PIN generally.  Although S 1724 provides
that several statutes, including 25 U.S.C. S 177, no longer
apply to PIN, it makes no mention of S 81.  If Congress
desired to repeal completely S 81 with respect to all PIN
real property it could easily have done so, as it did with S
177.  Cf. Bailey v. United States, 116 S. Ct. 501, 507 (1995)
(specifying that if Congress desired to alter a statute it
specifically would have done so); Russello v. United States,
464 U.S. 16, 23 (1983) ("'[W]here Congress includes
particular language in one section of a statute but omits it
in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the
disparate inclusion or exclusion.'") (quoting United States
v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972)); Hirschey
v. F.E.R.C., 760 F.2d 305, 308 (D.C. Cir. 1985) (indicating
that Congress understands how to effect such results); see
also Altheimer, 983 F.2d at 805 (explaining that Congress has
neither explicitly nor implicitly overruled S 81).  We thus
do not find that the Maine Indian Claims Settlement Act
implicitly repealed S 81 with respect to all PIN land.

                            -38-                                         38

sense but logic as well.20                         v. 

      ,                                        See Lummi Indian Tribe    Whatcom            County   5 F.3d  1355,  1359  (9th Cir.  1993)  (ruling  that

Nonintercourse                           Act                              did                                  not apply to land Indian tribe purchased

in fee simple over  which Congress previously terminated  its

trust                  obligation);                              cf.                                                                  Fe                                   deral Power Comm'n v. Tuscarora Indian

Nation, 362  U.S.  99, 110-15  (1960) (finding  that  federal

government  did not  own an  interest in  lands Indian  tribe

purchased in fee simple).

          Applying  S  81  to  the  Holden  Lot  also   would

necessitate that almost every agreement for services executed

with an  Indian tribe, no  matter how  minute, would  require

Secretarial approval.  See In re United States ex rel.  Hall,

825                F.                   Supp.                        1422,                              1434                                   (D. Minn. 1993) (discussing undesirable

implications of such an  interpretation), aff'd, 27 F.3d  572

(8th                 Cir.                      1994),                            cert.                                                                  de                                   nied, 115 S. Ct. 1112 (1995); see also

Raymond  Cross,  De-Federalizing  American  Indian  Commerce:

Toward                   a                     New                         Political Economy for Indian Country, 16 Harv. J.

L. &amp;  Pub. Pol'y  445, 489  (1993) (indicating  that even  as

presently interpreted, "[e]xperience has shown . . . that  in

many cases  . .  . [S 81]  harms, rather  than helps,  Indian

20.  The fact that Congress explicitly determined that the
Nonintercourse Act does not apply to PIN further
distinguishes this case from the cases in which courts have
interposed a trust obligation in regard to real property that
Indian tribes have purchased in fee simple.  See Alonzo, 249
F.2d at 196; 7,405.3 Acres of Land, 97 F.2d at 422-23. 
Congress never stated that the Nonintercourse Act did not
apply to the real property at issue in Alonzo or 7,404.3
Acres of Land.

                            -39-                                         39

tribes.   Its  rigid formalism  and over-inclusiveness  chill

business dealings between  tribes and  third parties  without

providing                      substantial offsetting benefits.").  We believe that

further                    extending administrative authority over the Holden Lot

would neither favor, see Montana v. Blackfeet Tribe, 471 U.S.

759, 766 (1985), nor protect, see In re Sanborn, 148 U.S.  at

227, Indian tribes.   In fact, adopting PIN's  interpretation

would frustrate Indian  tribes' efforts  to promote  economic

development and fiscal autonomy.  

          This analysis reflects the modern trend in  federal

Indian                   policy away from outmoded paternalistic21 practices and

policies.                                             Se                        e Cohen's Handbook at 180-206; Federal Indian Law

at               151-59.                                               Particularly during the last forty years, Congress

has endeavored to afford Indian tribes the latitude to pursue

their social, political, and economic goals as they determine

appropriate.  See,  e.g., 25 U.S.C.  S 450 (proclaiming  that

"prolonged                       Federal                              domination . . . has served to retard rather

than  enhance  the  progress  of  Indian  people  and   their

communities by depriving Indians  of the full opportunity  to

develop leadership skills crucial to the realization of  self

government");                         25 U.S.C. S 450a (declaring Congress' commitment

21.  One proponent of S 81 described the statute as follows: 
"If it is enacted and becomes part of the law it will be the
best shield, the best protection, and the best security for
the rights and the helplessness of these sons of the forest
that has ever been devised by American legislation or
American humanity."  Cong. Globe 41st Cong., 3d Sess. 1483,
1484 (daily ed. Feb. 22, 1871) (comments of Senator Davis).

                            -40-                                         40

to               "the                    establishment                                 of                                    a meaningful Indian self-determination

policy");                      Blatchford                                                              v.                                   N                                   ative Village of Noatak, 501 U.S. 775,

793                (1991)                      (Blackmun,                                 J., dissenting) (noting that Congress has

passed legislation  in recent decades  "as part  of a  larger

national                     policy                           of                              'self-determination' for the Native American

peoples").                                               To                           find                               S                                 81                                    applicable to a tract of real property

that  PIN purchased  in fee  simple to  promote its  business

interests would contravene  modern efforts  to secure  tribal

self-determination.

          In                         light                               of                                 these                                       policy                                              considerations, the dictates

of common sense, the vast majority of S 81 jurisprudence, and

the Secretary's interpretation,  we conclude that the  second

Settlement                       Agreement does not qualify as "relative to [Indian]

lands."                                         This Agreement did not pertain to Indian trust lands.

In fact, the second  Settlement Agreement involved lands  PIN

purchased in fee simple to promote its investment  objectives

over which Congress expressly disavowed trust responsibility.

To  rule that  this  Agreement necessitated  the  Secretary's

approval  pursuant to  S 81,  we conclude,  would strain  the

statute's                      ordinary                              meaning and exceed its drafters' intentions.

          We recognize that statutes affecting Indian  tribes

must be  construed liberally  in favor  of the  tribes.   See

Blackfeet  Tribe, 471  U.S.  at 766.    The rule  recited  in

Blackfeet Tribe, however, does not require a court to  ignore

compelling authority supporting a conclusion contrary to  the

                            -41-                                         41

position                     that a particular Indian tribe advances.  See Lyng v.

Northwest Indian Protective Ass'n, 485 U.S. 439, 456  (1988).

We therefore hold that the Settlement Agreements did not fall

within                   the                       parameters                                 of                                    S 81, and thus that the two Settlement

Agreements constituted valid, binding releases that  preclude

PIN from further pursuing its remaining claims.

          2.  Underlying Agreements

          Despite the  fact that S 81  does not apply to  the

Settlement                       Agreements, and thus that the Settlement Agreements

function to release PIN's  remaining claims, we must  briefly

consider whether S 81 applies to the underlying agreements at

issue                  in                     this case.  We pursue this inquiry to deter potential

abuse                  stemming from the execution of a settlement agreement in

the context  of S  81.   We are  particularly concerned  that

parties to an agreement for services relative to Indian trust

lands may seek to avoid securing Secretarial approval of such

agreement  pursuant to S  81 by executing  a relet that  this

release did not constitute an agreement with an Indian  tribe

for services relative  to Indian lands, and that the  release

functions to prohibit any action that a party to the  release

initiates  subsequently  to  void  the  underlying  agreement

pursuant                     to                        S                         81.22                                                                                            To                                   avoid creating a potential safe harbor,

22.  Even if such a release did preclude a party's action to
invalidate the underlying agreement pursuant to S 81, as in
the instant case, S 81's qui tam provision would permit
another party to bring suit in the name of the United States
to invalidate the underlying agreements if these underlying

                            -42-                                         42

we evaluate the three underlying agreements at issue in  this

case  to  determine whether  or  not  they  necessitated  the

Secretary's approval pursuant to S 81.

               a.  Asset Purchase Agreement

          The  Asset  Purchase  Agreement23  constituted  the

operative agreement relating to the Partnership's purchase of

SHC.                                   This                      Agreement                                was                                    a pure sales contract.  Without regard

to whether  S  81's "services"  component pertains  to  sales

contracts, see Menominee Tribe, 233 U.S. at 570-71 (finding S

81 applicable to  contract for sale of logging equipment  and

supplies); but see Hall, 825 F. Supp. at 1431-32 (ruling that

"Congress  did  not  intend  that  section  81  govern  sales

contracts"),  the  only  real  property  that  the  Agreement

mentioned was real property that the seller, SHC,  possessed,

not land that an Indian tribe, specifically PIN, owned.  This

Agreement                      simply                            stipulated that the Partnership secured a $3.5

agreements did not bear the Secretary's approval.  See Tribal
Development, 49 F.3d at 1212; United States ex rel. Yankton
Sioux Tribe v. Gambler's Supply, Inc. 925 F. Supp. 658, 668-
69 (D.S.D. 1996).

23.  PIN refers both to the Asset Purchase Agreement and to
"associated contracts and documentation" as being void ab
initio pursuant to S 81.  The Partnership executed a Non-
Competition and Consulting Agreement with John Schiavi on
December 30, 1996.  Although this Agreement did provide for
services, in the form of consulting duties, it never
mentioned and did not relate to any Indian lands.  The non-
competition agreements that the Partnership executed with CWC
similarly did not pertain to any Indian lands.  Section 81,
therefore, does not apply to these "associated contracts and
documentation."

                            -43-                                         43

million                    guaranteed loan from Key Bank; it neither required nor

referred                     to                        PIN's use of its land as collateral for this loan.

               b.  Partnership Agreement

          We                         find                              that                                  the                                      Partnership Agreement did constitute

a              services                      agreement                                because it contained a provision dictating

that                 Palmer                        enjoyed                               sole                                    responsibility for managing SHC to the

benefit of both Palmer and PIN.  See Koberstein, 762 F.2d  at

619  (finding  that  S  81  governs  management   contracts).

Nonetheless,  despite  PIN's   assertion  that  the   parties

envisioned the use  of PIN's lands to advance SHC's  business

activities, the  Partnership Agreement  neither  specifically

mentioned                      nor                         indirectly                                    referenced any use of land.  It merely

stated                   that                        PIN would provide a $1 million Letter of Credit to

secure Key Bank's Guaranteed  Loan financing the purchase  of

SHC.   The Partnership  Agreement, therefore,  does not  fall

within                   the                       parameters                                 of                                    S 81 because it does not constitute an

agreement   for   services  relative   to  Indian   lands.24 

          Because the service that the Partnership  Agreement

provided for  entailed  the  management of  SHC,  we  briefly

evaluate                     this Agreement in light of Altheimer, which addressed

the applicability of S 81 to a management agreement.  See 983

F.2d                 at                    811.                          The relevant Altheimer factors indicate that the

24.  As previously noted, the parties to the Partnership
Agreement submitted this Agreement for the Secretary's
approval pursuant to S 81.  The Secretary specifically
determined that S 81 did not pertain to the Agreement.

                            -44-                                         44

Partnership Agreement  does not fall  within S 81's  purview.

Specifically, the Partnership Agreement did not relate to the

management of a facility to be located on Indian lands,  and,

even if it did, the operation of such facility would not have

depended in  any way  on  PIN's legal  status as  a  separate

sovereign.  See id.

               c.  Lease-Option Agreement

          The Lease-Option Agreement, unlike the  Partnership

Agreement, did not pertain  to "services" relative to  Indian

lands.25  The Lease-Option simply provided that Schiavi Homes

enjoyed the right to use  and improve the Holden Lot for  the

purpose of conducting its business.  It also afforded Schiavi

Homes an option to purchase the Holden Lot.  The Lease-Option

never  mentioned and  did  not  relate to  the  provision  of

services.  In addition, although it did involve real property

that                 PIN                     owned (the Holden Lot), as previously noted this land

was                not                    within the parameters of S 81 because it was not trust

land.   Even if  the Holden Lot  did constitute Indian  trust

lands, S  81 would not  apply to  the Lease-Option  Agreement

25.  The Assignment of Lease executed on December 1, 1988,
transferring Schiavi Homes' entire interest in the Lease, and
particularly the option to purchase the Holden Lot, to Key
Bank as additional collateral for the repayment of its
Guaranteed Loan in the amount of $3,500,000 did not require
Secretarial approval under S 81.  This agreement did not
entail any services and pertained only to the Holden Lot not
to PIN's trust lands.  On July 20, 1989, moreover, PIN
secured Bureau of Indian Affairs approval for this Assignment
pursuant to Title IV of the Indian Financing Act of 1974, 25
U.S.C. SS 1521-1524.

                            -45-                                         45

because                    the                        Maine                             Indian                                    Claims Settlement Act provided that 25

U.S.C.  SS  396  &amp; 415  would  govern  leases  involving  PIN

territory.  See 25 U.S.C. S 1724(g)(3)(A)&amp;(B) (providing that

25 U.S.C.  SS  396a-396g &amp;  415-415d  govern leasing  of  PIN

Territory); see also Koberstein, 762 F.2d at 619  (indicating

that S 81  governs transactions relative to Indian lands  for

which Congress has not passed a specific statute).

B.  Breach of Contract

          Palmer and Palmer Management assert that by  filing

the  instant suit,  PIN breached  the contractual  obligation

memorialized  in the  Settlement Agreements  to "release  all

claims."  In  their counterclaim, these two  cross-Appellants

sought damages from this  purported breach deriving from  the

"loss of time that could otherwise be spent in the pursuit of

legitimate business interests."  On appeal, Palmer and Palmer

Management request damages "caused by the lawsuit outside  of

attorney                     fees."                         26                                                                                      Because we find the Settlement Agreements to

constitute                       valid                            releases not within the parameters of S 81, we

now                consider                         Palmer and Palmer Management's breach of contract

counterclaims.

26.  The district court devoted the majority of its analysis
to the issue of whether a party may recover attorney's fees
for the breach of a settlement agreement's release of claims. 
The district court found that a party could not recover such
attorney's fees in the defense of a suit that itself
constituted a breach of a settlement agreement.  See
Penobscot Indian Nation v. Key Bank, Civ. No. 94-0212-B, at 6
(D. Me. Dec. 13, 1995).  Neither Palmer nor Palmer Management
raises this issue on appeal.

                            -46-                                         46

                            -47-                                         47

          Both Settlement  Agreements  state:   "The  parties

hereto                   have                       been                            collectively negotiating a final settlement in

the                Schiavi                        Homes                             loan                                  transaction, termination of business and

liquidation, and are desirous of reaching a final  settlement

between the parties  to avoid litigation now in existence  or

that could  hereafter  arise."   As mentioned  earlier,  both

Settlement Agreements  expressly  provided that  the  parties

"release, remise and forever discharge each other . . .  from

all suits .  . . at law or in equity . . . which directly  or

indirectly                       relate[]                                to                                  .                                    . . any . . . transactions . . . among

each other."  The district court dismissed Palmer and  Palmer

Management's claim for lost  business damages on the  grounds

that PIN's lawsuit in violation of the Settlement  Agreements

"was  seemingly  in good  faith"  and  "was  not  frivolous."

Penobscot Indian Nation v. Key Bank, Civ. No. 94-0212-B, at 6

(D. Me. Dec. 13, 1995).

          "A compromise agreement,  fairly arrived at, is  an

enforceable  contract  both  under  Maine  law  and   general

doctrine."                     27                                                 Warner v. Rossignol, 513 F.2d 678, 682 (1st Cir.

1975);                   see                                            al                        so Phillips v. Fuller, 541 A.2d 629, 629 n.1 (Me.

27.  Despite the fact that this case raises a federal
question, and thus that the district court exercised
jurisdiction pursuant to 28 U.S.C. S 1331 not 28 U.S.C. S
1332, we apply Maine law to the remaining claims because they
all involve state law and raise substantive rather than
procedural issues of law.  See Erie R.R. Co. v. Tompkins, 304
U.S. 64, 78 (1938); Walton v. City of Southfield, 995 F.2d
1331, 1343 (6th Cir. 1993) (applying state law in federal
question case involving pendent state claims).

                            -48-                                         48

1988) (recognizing that claim can be asserted for a breach of

a settlement agreement, and, specifically, that such a  claim

can                take                     the                         form of a counterclaim); A. L. Brown Constr. Co.,

Inc.  v. McGuire,  495  A.2d  794, 798  (Me.  1985)  (finding

settlement agreement to be an enforceable contract).  Whether

or not an enforceable  contract is breached does not turn  on

whether or not the breaching party acted in good faith.   Cf.

John                 D.                    Calamari &amp; Joseph M. Perillo, The Law of Contracts 455

(2d                ed.                    1977)                         ("Any                               failure to perform a contractual duty which

has  become  absolute  constitutes  a  breach.");  E.   Allan

Farnsworth,                        Contracts                                                                636 (1982) ("[T]o abandon the traditional

view                 and                     take                         account                                 of                                    good faith in all cases would probably

be unworkable.").

          The  issue  which   demands  our  full   attention,

therefore, concerns the nature of the damages that Palmer and

Palmer Management may receive as a result of PIN's breach  of

the  Settlement Agreements.    Palmer and  Palmer  Management

contend                    that                         Dodge v. United States Auto. Ass'n, 417 A.2d 969,

975 (Me. 1980)  supports their claim  for damages other  than

attorney's  fees.   In  Dodge,  the parties  entered  into  a

settlement                       agreement concerning a homeowners insurance policy.

The  agreement included  a  provision  releasing  all  claims

stemming  from  the insurance  policy.    Subsequent  to  the

execution of the agreement, plaintiff filed suit against  the

insurance company.  The insurance company then responded with

                            -49-                                         49

"a counterclaim for  specific performance  of the  settlement

agreement and for damages resulting from [plaintiff's] . .  .

breach thereof," id. at 972, which "consisted principally  of

its attorney's fees incurred in defending the suit brought by

[the  plaintiff]  .  .  .  in  violation  of  the  settlement

agreement,"  id. at 975.   The Superior  Court did not  order

specific shed by  the court's disposition of the main  claims

asserted                     by                        [the plaintiff]."  Id. at 975.  The Superior Court

also                 denied                        the insurance company's claim for attorney's fees.

See id.  

          The insurance company cross-appealed these rulings,

recognizing that  if  the Maine  Supreme Court  affirmed  the

Superior                     Court's judgment, there would be no need to reach the

issue of specific performance.  The Dodge court held:

          Because of the pervasiveness and vigor of
          the American rule making each party  bear
          its own  attorney's  fees, parties  to  a
          settlement--in  absence  of  an   express
          contractual provision  to the  contrary--
          must  be  taken  to  intend  to   exclude
          attorney's  fees from  the  damages  that
          otherwise  would  be  recoverable  as   a
          foreseeable and probable consequence of a
          breach of the agreement.

Id.                                               The                     Maine Supreme Court explained in detail its denial of

damages                    which normally attend a breach of contract in the case

of the breach of a settlement agreement:    

          An after-the fact rationalization for the
          rule denying normal contract damages  for
          breach of settlement agreements can  also
          be                         developed                                   from the strong public policy
          favoring such settlements.  Were the rule

                            -50-                                         50

          otherwise, a  lawyer would  be much  more
          wary of  informal settlement  discussions
          for fear of subjecting his client to  the
          added  expense of  the  opposing  party's
          attorney's   fees  if   it   were   later
          determined that those discussions had  in
          fact  reached  the  point  of  a  binding
          bilateral                                agreement.  On balance it may be
          preferable to  encourage free  settlement
          negotiations, undampened  by the risk  of
          the heavy damages that would be  assessed
          in those relatively  few cases where  one
          party fails to perform its agreement.

Id.  at 976.    The Dodge  court  thus denied  the  insurance

company's cross-appeal in full.

          Although it may be debatable whether Dodge resolved

the issue concerning the possibility of a non-breaching party

recovering  on a  breach  of  contract theory  the  costs  of

litigation, other than  attorney's fees,  resulting from  its

defense  of a  suit filed  in contravention  of a  settlement

agreement, we need not take up this debate today.  Palmer and

Palmer Management have not directed us to any Maine case that

grants damages of the variety that they seek, and we have not

found                  any                      such case on our own initiative.  We note that Maine

does                 recognize the remedy of specific performance in the event

of a breach of a settlement agreement.  See McGuire, 495 A.2d

at               798                   (indicating that party may seek specific performance as

remedy for breach of settlement agreement).  By ruling that S

81 does not apply to the Settlement Agreements in this  case,

and                thus                     that                         these                               Agreements preclude PIN's remaining claims,

we effectively have provided Palmer and Palmer Management the

                            -51-                                         51

equitable remedy of  specific performance  of the  Settlement

Agreements.

          We                         need                              not                                  sift alternative sources of authority to

resolve  the exact issue  of whether or  not the law  affords

damages in addition to specific performance in the event of a

breach                   of                      a                       settlement                                  agreement28 because no material issue of

fact                 exists                        as                          to                             the                                 damages that Palmer and Palmer Management

sustained as  a  result of  PIN's  breach of  the  Settlement

Agreements in this case.  See Fed. R. Civ. P. 56(e); Anderson

28.  We recognize that certain jurisdictions may permit a
party to sue for both specific performance and consequential

See, e.g.,           v.     , 428 N.W.2d 647, 658 (Iowa            damages in the case of the breach of a settlement agreement.                        Berryhill    Hatt
1988); see also Restatement (Second) of Contracts S 281(3)
(1981).  Other jurisdictions, however, apparently require a
party to select between specific performance and monetary
damages in the event of a breach of a settlement agreement. 
See, e.g., TNT Marketing, Inc. v. Agresti, 796 F.2d 276, 278
(9th Cir. 1986).  Even those jurisdictions that appear to
afford an aggrieved party the right to sue both for specific
performance and for consequential damages are not consistent
in their approach.  In Village of Kaktovik v. Watt, 689 F.2d
222 (D.C. Cir. 1982), for instance, the District of Columbia
Circuit first stated:  "Upon breach [of a settlement
agreement] by one party, the other party may obtain damages
or specific performance as appropriate."  Id. at 230; see
also Jackson v. Washington Monthly Co., 569 F.2d 119, 120 n.
1 (D.C. Cir. 1977).  The Watt court then declared:  "Upon
anticipatory breach of a settlement contract . . . the non-
breaching party m[ay] choose . . . to enforce the agreement
and perhaps also recover damages resulting from its breach .
. . ."  Id. at 231.  We therefore believe that further
exposition of this issue, see Blinzler v. Marriott Int'l,
Inc., 81 F.3d 1148, 1151 (1st Cir. 1996) (explaining that
when a state's highest court has not propounded on an issue
in question, "we seek guidance in analogous state court
decisions, persuasive adjudications by courts of sister
states, learned treatises, and public policy considerations
identified in state decisional law"), would be of little
benefit in this case.

                            -52-                                         52

v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986) ("[T]here is

no               issue                     for                        trial                              unless there is sufficient evidence favoring

the nonmoving party for a  jury to return a verdict for  that

party."); Celotex v. Catrett, 477 U.S. 317, 323 (1986)  ("The

moving party is 'entitled to a judgement as a matter of  law'

[if]                 .                   .                     .                       the nonmoving party has failed to make a sufficient

showing on an essential  element of her case with respect  to

which she  has  the burden  of proof.");  Cortes-Irizarry  v.

Corporacion                        Insular                               de                                  Seguros, No. 96-1894, slip op. at 7 (1st

Cir.                 April                       16,                          1997)                                ("To defeat a motion for summary judgment,

the nonmoving  party  must  demonstrate the  existence  of  a

trialworthy issue as  to some material  fact.").  Palmer  and

Palmer                   Management                             have                                  failed to submit any evidence of damages

resulting either from  "loss of time that could otherwise  be

spent in the pursuit  of legitimate business interests,"  or,

more generally, from "the lawsuit outside of attorney  fees."

We thus affirm the district court's grant of summary judgment

for PIN on Palmer  and Palmer Management's counterclaims  for

breach of the settlement agreement.

C.  Defamation

          Key Bank asserts that  the district court erred  in

granting                     summary                            judgment for Marcello on Key Bank's defamation

counterclaim.                          The district court ruled that the press release

Marcello prepared and distributed to the media concerning the

two press conferences  in September 1994  did not defame  Key

                            -53-                                         53

Bank.29       Penobscot                                     n

Maine law governing a defamation claim initiated by a private

person,                     See           , 906 F. Supp.  at 22-23.  Relying  o                    the district court  determined that Marcello was  not

negligent                      in                         drafting and circulating the press release to the

media because he reasonably relied "on the veracity of  PIN's

complaint."   Id.  Finding  that Marcello's  conduct did  not

amount even to the negligence applicable to private  persons,

the district court did  not consider whether or not Key  Bank

constituted a public figure.  See id.  

          Key Bank insists that  a genuine issue of  material

fact                 existed                         concerning whether or not Marcello was negligent.

Key                Bank                     also                         argues                                that the district court improperly granted

summary judgment sua sponte on its defamation claims  against

PIN,  Phillips, and  Pardilla.   The  other  cross-Appellants

(Schiavi, Palmer, Palmer Development, and Palmer  Management)

29.  As it did below, Key Bank argues that the following
statements, contained in the press release that Marcello
drafted and disseminated, are defamatory:  (1) the statement
claiming that "money . . . had been stolen from" PIN; (2) the
statement asserting that Key Bank "conspired and acted to
defraud the Penobscot Nation;" (3) the statement explaining
that "the conduct of Key Bank . . . resulted in the Penobscot
Nation entering into an improvident and unconscionable
partnership investment" pursuant to which it "relinquished
its right, its land, and its money to those who plundered the
Penobscot Nation, lied to the Penobscot Nation and its
members, and stole from the Penobscot Nation and its
members;" (4) the statement positing that "bad acts, fraud,
and bad faith committed by Key Bank . . . against the
Penobscot Nation is a far greater conspiracy than could have
been outlined" in the press conference; and (5) the statement
insisting that PIN "suffered grave financial losses and later
learned that they have been victimized, manipulated, lied to,
and used by Key Bank." 

                            -54-                                         54

echo Key Bank's objection to the district court's sua  sponte

ruling on their defamation claims against PIN.  They maintain

that this ruling constituted reversible error.

          1.  Marcello

          We                         first                              consider                                       whether the district court properly

granted                    summary judgment for Marcello on Key Bank's defamation

claim.  In order to state a claim for defamation in Maine,  a

private                    person must establish the following:  "(a) a false and

defamatory statement concerning another; (b) an  unprivileged

publication to a third party; (c) fault amounting at least to

negligence on  the  part of  the  publisher; and  (d)  either

actionability                         of the statement irrespective of special harm or

the existence  of special  harm caused  by the  publication."

Powers, 596 A.2d at  69.  The issue  in this case is  whether

Marcello's conduct constituted negligence.

          We                         find                              that                                  the                                      existence of material issues of fact

precludes                      the entry of summary judgment concerning this issue.

See                              Lipsett                                              v.                          University                                    of P. R., 864 F.2d 881, 885 (1st Cir.

1988)  ("If,  after .  .  . canvassing  .  . .  the  material

presented, the district court finds that some genuine factual

issue                  remains in the case, whose resolution one way or another

could affect its outcome, the court must deny the  motion.").

We               believe                      that                           reasonable jurors could find negligence in this

case.  See Liberty Lobby, 477 U.S. at 248 (indicating that  a

material issue of fact exists "if the evidence is such that a

                            -55-                                         55

reasonable jury  could return  a verdict  for the  non-moving

party"); see also Mejias-Quiros v. Maxxam Property Corp., 108

F.3d 425, 427 (1st Cir. 1997) ("Negligence . . . is usually a

jury issue,  but only if there  exists evidence from which  a

rational jury could  find negligence in the case at  hand.");

Taylor  v. Gallagher,  737  F.2d  134, 137  (1st  Cir.  1984)

("Summary judgment  is  inappropriate  in  [cases  involving]

negligence                       .                         .                          .                            if                               genuine issues of material fact exist or if

reasonable jurors could draw different inferences from agreed

facts.").

          Reasonable jurors could draw a conclusion, at  odds

with                 the                     district court's finding, that Marcello did much more

than "read the substance of PIN's complaint to the print  and

broadcast                      media at PIN's press conference."  Penobscot, 906 F.

Supp. at 23.  Marcello's press release did not simply  recite

the complaint; it used such language as "lied to," "cheated,"

"manipulated," "stole[] from,"  and "conspired  and acted  to

defraud"                     to                        describe Key Bank's conduct.  Given the negligence

standard in Maine of a reasonably prudent person acting under

like circumstances, see Lambert v. Tripp, 560 A.2d 1097, 1100

(Me. 1989);  Wing v.  Morse, 300  A.2d 491,  499 (Me.  1973);

Restatement (Second) of  Torts S 283 (1978), we believe  that

reasonable jurors could find that Marcello's characterization

of  Key  Bank's conduct  amounted  not  simply  to  "colorful

adjectives                       and                          common                                 parlance," Penobscot, 906 F. Supp. at 23,

                            -56-                                         56

but to negligence.  See Marston v. Newavom, 629 A.2d 587, 592

(Me. 1993) ("[D]efamatory language must be 'construed in  the

light of what might reasonably have been understood therefrom

by the persons who [heard] it.  In interpreting the language,

it is . . . a question of . . . the understanding of those to

whom the words are addressed and of the natural and  probable

effect                   of                      the words on them.") (quoting Picard v. Brennan, 307

A.2d 833, 835 (Me. 1973)).

          Regardless of the reasonableness of the  statements

that  Marcello  disseminated  to  the  media  at  the   press

conferences, a material  issue of fact remains as to  whether

Marcello  actually  "rel[ied]   on  the  veracity  of   PIN's

complaint."                                                 Penobscot, 906 F. Supp. at 23.  In his deposition

testimony,  Marcello stated  repeatedly  that  he  could  not

recollect the exact  documents that he  used to assemble  his

press                  package.  At his deposition, in fact, Marcello could not

locate  the written  notes  or  statements that  he  made  in

preparation for the  press conferences.  There is a  material

issue                  as                     to                        whether Marcello even consulted PIN's complaint in

advance of the press conferences.

          In any  event, Marcello has  not made a  sufficient

showing that he was privileged to disseminate the  defamatory

statements                       to the media.  Maine law provides that "allegations

made in  pleadings  are absolutely  privileged."   Dineen  v.

Daughan, 381  A.2d 663, 664 (Me.  1978); see also Creamer  v.

                            -57-                                         57

Danks, 700  F. Supp. 1169.  1171 (D.  Me.) (discussing  Maine

judicial                     proceedings                                pleadings privilege), aff'd, 863 F.2d 1037

(1st Cir. 1988).  The Maine Supreme Court has indicated  that

the privilege  may be  "lost by  unnecessary or  unreasonable

publication                        beyond the scope of the privileged circumstances."

Vahlsing Christina Corp.  v. Stanley, 487 A.2d 264, 267  (Me.

1985); see also Sriberg  v. Raymond, 544 F.2d 15, 16-17  (1st

Cir.  1976)   ("[I]f  an   occasion  is   privileged  as   to

communications between certain parties, the privilege is lost

if  the  communication  is  made  in  such  a  manner  as  to

unnecessarily                          and                             unreasonably publish it to others, as to whom

the                occasion                         is not privileged.") (quoting Galvin v. New York,

168                N.E.2d                       262,                           266                               (N.Y. 1960)).  The Vahlsing Christina court

reversed                     the                         dismissal of a defamation claim predicated on the

dissemination of false  statements originally contained in  a

complaint                      on                         the basis that publication removed the statements

from the privileged context.  See id.

          In                         this                              case,                                   a                                     media                                           relations consultant engaged by

a party  to a lawsuit  claims protection  under the  judicial

proceedings privilege for statements that he disseminated  to

the press  concerning  the suit.   Marcello  published  these

statements on the same  day that PIN filed the complaint  but

prior to the  commencement of any  courtroom activity.   "The

judicial                     proceedings                                privilege reflects public policy regarding

the importance and necessity of the free flow of  information

                            -58-                                         58

during such proceedings."  Creamer, 700 F. Supp. at 1171.  In

light                                                       e

public                   policy                         underlying                                    the judicial proceedings privilege, we

doubt very  much that  this privilege  applies to  Marcello's

publications, which were neither reasonable nor necessary for

    efficient disposition of the legal proceedings at  issue                  of the  circumstances of the  press conference and  th            the                                                         .

See Frazier  v. Bailey,  957 F.2d  921, 932  (1st Cir.  1992)

(explaining                        that                            under                                  Massachusetts law, if a communication is

"unnecessarily or unreasonably  published," it  is no  longer

privileged); Dineen,  381 A.2d at  665 ("The  purpose of  the

privilege                      is                         to allow the attorney to litigate strenuously the

interests                      of                         his                            client.                                     To fulfill this purpose the privilege

need only be broad enough to encompass statements relevant to

those interests.  To extend the protection beyond this  point

would  be  to abuse  the  public  policy which  acts  rt  has

explained, moreover, that  this privilege applies to  judges,

parties, witnesses, and attorneys.  See id.; Dineen, 381 A.2d

at               664-65.                                              Marcello                                directs us to no authority indicating that

the  judicial  proceedings  privilege  pertains  to  a  media

consultant who is not a party or a witness or an attorney  in

the dispute at issue.30

30.  Marcello contends that his statements are privileged
because they fairly and accurately report a judicial
proceeding.  The privilege that Marcello attempts to adopt at
this point pertains to defamatory statements contained in
reports of judicial proceedings prepared by reporters.  See
Brown v. Hearst Corp., 54 F.3d 21, 25 (1st Cir. 1995); Jones
v. Taibbi, 512 N.E.2d 260, 266 (Mass. 1987).  Regardless of

                            -59-                                         59

          We                         thus                              conclude that Marcello's statements were not

within the  judicial proceedings  privilege.   Based on  this

conclusion,                        in addition to our findings that reasonable jurors

could determine that  Marcello did more than read from  PIN's

complaint and  that a  material issue  of fact  exists as  to

whether  Marcello  actually  relied  on  PIN's  complaint  in

formulating these statements,  we believe  that the  district

court improperly granted summary judgment for Marcello.

          We                         note                              that                                   if the trial court, with the assistance

of  further factual  development,  determines that  Key  Bank

constitutes a  public figure, it  may resolve the  defamation

issue                  on                     alternative grounds.  According to the Supreme Court,

          it                         may                             be                                possible for someone to become a
          public                             figure through no purposeful action
          of his own,  but the  instances of  truly
          involuntary  public   figures   must   be
          exceedingly                                  rare.  For the most part those
          who attain this status have assumed roles
          of especial prominence in the affairs  of
          society.  Some  occupy positions of  such
          persuasive power and influence that  they
          are  deemed   public  figures   for   all
          purposes.                                                                 More commonly, those classed as
          public figures have thrust themselves  to
          the  forefront   of   particular   public
          controversies in  order to influence  the
          resolution of the issues involved.

Gertz  v. Robert  Welch,  Inc.,  418 U.S.  323,  345  (1974).

Although  ostensibly  a question  of  law  suitable  for  our

the fairness or accuracy of Marcello's publications, he is
not a reporter.  In any event, Maine does not appear to have
adopted the "reporter privilege" to this date, and we will
not speculate as to the future development of Maine law.

                            -60-                                         60

resolution, see  Quantum Elecs. Corp.  v. Consumers Union  of

United States,  Inc., 881 F.  Supp. 753,  763 (D.R.I.  1995);

Haworth v. Feigon, 623 A.2d 150, 158 (Me. 1991);  Restatement

(Second) of Torts S 580A  cmt. c (1978), a finding of  public

figure   status  necessitates   a   detailed   fact-sensitive

determination, see Bruno &amp; Stillman, Inc. v. Globe  Newspaper

Co., 633 F.2d 583, 589 (1st Cir. 1980); Quantum, 881 F. Supp.

at               763;                    Lawrence                            H.                               Tribe, American Constitutional Law S 12-13,

at 880-81 (2d ed. 1988) (explaining that the determination of

whether  an individual  constitutes a  limited public  figure

necessitates                         that                             the                                 trial court establish first the existence

of a "public  controversy," and second  "that the nature  and

extent                   of                      the                         person's                                  participation in the controversy reached

some critical mass at which 'voluntary injection' occurred").

On               the                   record                         before                                us                                   now, we cannot make this particularized

factual determination.31

          If  the  trial  court  determines  that  Key   Bank

constitutes a public figure, Marcello may claim a conditional

privilege                      regarding                               his                                   publications concerning Key Bank.  Such

a privilege exists for statements concerning public  figures.

See Curt is Publ'g Co.  v. Butts, 388  U.S. 130, 155  (1967).

31.  Marcello must establish sufficient evidence to support a
factual conclusion that Key Bank is a public figure.  See
Restatement (Second) of Torts S 580A cmt. e (1977) ("For a
privilege created by the law to apply, the person who seeks
to dispel the seemingly tortious character of his conduct
normally has the burden of raising the issue of the privilege
and proving the existence of its elements.").  

                            -61-                                         61

Liability                      does                          not                              attach for a defamatory statement concerning

a public figure  unless the publisher of the statement  acted

with knowledge or  reckless disregard of  the falsity of  the

defamatory publication.  See New York Times v. Sullivan,  376

U.S.                 254,                      279-80 (1964); Curtis Publ'g, 388 U.S. at 155; Time,

Inc. v.  Firestone,  424 U.S.  448,  455 (1976);  Michaud  v.

Inhabitants                        of                          Livermore                                    Falls, 381 A.2d 1110, 1113 (Me. 1978).

On the record before us, we do not presume to direct a  trial

court finding regarding either the predicates for or, in  the

event that the trial court establishes the existence of  such

predicates, the consequences of a conditional privilege.

          2.  PIN, Phillips, and Pardilla

          We now turn  to the issue  of whether the  district

court properly granted summary  judgment sua sponte for  PIN,

Phillips, and Pardilla.  "It is [clear] that district  courts

have  the  power  to  grant  summary  judgment  sua  sponte."

Berkovitz v. Home Box Office, Inc., 89 F.3d 24, 29 (1st  Cir.

1996).  Two conditions,  however,  circumscribe the  district

court's exercise  of this power:   first,  discovery must  be

"sufficiently  advanced  that  the  parties  have  enjoyed  a

reasonable opportunity to glean the material facts;"  second,

the                district                         court must "give[] the targeted party appropriate

notice and a chance to present its evidence on the  essential

elements of the claim or  defense."  Id.; see also Stella  v.

Tewksbury                    ,                       4                        F.3d                             53,                                 55                                    (1st Cir. 1993); Jardines Bacata, Ltd.

                            -62-                                         62

v. Diaz-Marquez, 878 F.2d 1555, 1560 (1st Cir. 1989). 

          In this case, discovery had proceeded to the  point

that                 the                     parties understood the material facts.  PIN filed its

complaint and conducted  the press  conferences in  September

1994.  The district court did not make its sua sponte  ruling

until October 1995.  By this time, the parties had compiled a

voluminous record  that included  depositions of  all of  the

parties involved in the press conference.

          As in Berkovitz, however, the district court  never

"gave the [cross-Appellants] a meaningful opportunity to cull

the  best evidence  supporting  [their] position[s],  and  to

present  that   evidence,  together   with  developed   legal

argumentation                        , in opposition to the entry of summary judgment"

with respect PIN, Phillips, and Pardilla.  Id. at 31.  On the

contrary, the district court's  sua sponte ruling took  these

parties by  surprise;  only Marcello  had moved  for  summary

judgment and neither Schiavi nor the Palmer Defendants  filed

defamation claims against Marcello.32

32.  Although Key Bank did have the opportunity to present
its position with respect to Marcello, it did not in the case
of PIN, Phillips, and Pardilla because none of these parties
moved for summary judgment.  Key Bank's argumentation may
have differed little in response to summary judgment motions
filed by PIN, Phillips, and Pardilla, given the similarity of
the facts and circumstances relating to its claims against
these parties.  The nature of PIN, Phillips, and Pardilla's
relationship to the conduct at issue as well as the defenses
that these parties now assert in response to Key Bank's
defamation claims, however, support Key Bank's argument that
it would have responded differently to these parties had the
district court afforded it an opportunity to do so.  See

                            -63-                                         63

          We acknowledge that "[t]his court from time to time

has                refused                        to permit appellants to take advantage of supposed

      ghts that had  not been called to the district  court's

attention by  way of a [timely]  motion to reconsider."   Id.

(citing United States v. Schaefer, 87 F.3d 562, 570 n.9  (1st

     1996);             oversi            Cir.        Grenier v. Cyanamid Plastics, Inc., 70 F.3d  667,

678 (1st Cir. 1995); VanHaaren v. State Farm Mut. Auto.  Ins.

Co., 989 F.2d 1, 4-5 (1st Cir. 1993)).  Like the appellant in

Berkovitz                    ,                      however,                               the                                   Palmer Defendants timely filed a motion

to reconsider.  Although Key Bank and Schiavi did not  follow

suit,                  the                     considerations                                    that govern the filing of a motion for

reconsideration are very flexible.  See Berkovitz, 89 F.3d at

31; United  States v. Roberts, 978  F.2d 17, 21-22 (1st  Cir.

1992).  In any event, neither the cases that Berkovitz  cites

nor Rule  56 imposes an  obligation on the  subject of a  sua

sponte summary judgment ruling to move for reconsideration in

order to preserve its claims on appeal.  We therefore refrain

from penalizing  Key  Bank and  Schiavi for  their  purported

oversight.  Because  the district court failed to afford  the

Stella, 4 F.3d at 56 (noting the special preparation
necessary to defend a motion for summary judgment). 
Significantly, Key Bank did not present evidence, either in
its written or in its oral defense to Marcello's summary
judgment motion, concerning PIN, Phillips, or Pardilla.  See
Berkovitz, 89 F.3d at 31 n.8 (reasoning that plaintiff at
issue in Berkovitz did not have an opportunity to put forth
evidence relating to summary judgment motion).  We thus
include Key Bank in our disposition of the district court's
sua sponte defamation rulings.     

                            -64-                                         64

cross-Appellants                             any                                opportunity to oppose its grant of summary

judgment for PIN,  Phillips, and Pardilla, we hold that  this

ruling cannot stand.

D.  Emotional Distress

          The district court awarded PIN summary judgment  on

Palmer's claims for both intentional and negligent infliction

of emotional distress deriving from the two press conferences

held                 in                    September                             1994.                                                                       In his Brief, Palmer merely adverts to

the issue  of  whether the  district court  properly  granted

summary judgment on these  two claims.  Specifically,  Palmer

mentions                     this issue only in the table of contents and a single

heading of his Brief.  Other than these floating  references,

Palmer  never  makes any  argument  in  his  principal  brief

concerning either  intentional  or  negligent  infliction  of

emotional                      distress.                                                                "It                                    is settled in this circuit that issues

adverted                     to                        on                          appeal                                 in                                    a perfunctory manner, unaccompanied by

some  developed  argumentation,  are  deemed  to  have   been

abandoned."  Ryan v. Royal  Ins. Co., 916 F.2d 731, 734  (1st

Cir.                 1990);                        s                        ee also Williams v. Poulos, 11 F.3d 271, 285 (1st

Cir. 1993).

          We recognize that, in its Reply Brief, PIN notes in

passing the  fact that the  district court "correctly"  ruled

against Palmer  and awarded summary  judgment to  PIN on  the

emotional  distress  claims  that  Palmer  mentioned  in  his

counterclaim.   In  his  Reply Brief,  Palmer  articulates  a

                            -65-                                         65

"response"                       to PIN concerning the emotional distress claims and

devotes four pages  to the argument  that the district  court

improperly                       granted                              PIN                                  summary judgment on these claims.  As we

have  stated previously,  "relief  from an  appellate  court,

requested for the first time in a reply brief, is  ordinarily

denied                   as                      a                       matter                              of                                 course."  Aulson v. Blanchard, 83 F.3d 1,

7  (1st Cir.  1996); see  also Indian  Motorcycle Assocs.  v.

Massachusetts Hous. Fin. Agency, 66 F.3d 1246, 1253 n.12 (1st

Cir. 1995).  The general rule set forth in Aulson and  Indian

Motorcycle applies to thi time in his Reply Brief.

E.  Supplemental Jurisdiction

          The                          final                                issue confronting us is whether or not the

district                     court properly exercised and now retains jurisdiction

over the state law claims at issue in this case.  28 U.S.C. S

1367(a)                    provides:                                                            "[I]n                                    any civil action of which the district

courts have original jurisdiction, the district courts  shall

have supplemental jurisdiction over all other claims that are

so related  to  claims in  the  action within  such  original

jurisdiction  that  they  form  part  of  the  same  case  or

controversy   under  Article   III  of   the  United   States

Constitution."  Section 1367(a)'s discussion of  supplemental

jurisdiction embraces both pendent and, more importantly  for

our purposes, ancillary jurisdiction.  See Rodriguez v. Doral

Mortgage Corp., 57 F.3d 1168, 1175 n.8 (1st Cir. 1995); Vera-

Lozano                                    v.                      Int                        ernational Broadcasting, 50 F.3d 67, 70 (1st Cir.

                            -66-                                         66

1995).

          In this case, the district court exercised original

jurisdiction                         pursuant                                 to                                    28 U.S.C. S 1331 because PIN's primary

claim                  arose                        under                             25                                U.S.C. S 81.  The district court correctly

exercised jurisdiction to  hear the Appellees'  counterclaims

because  state and  federal  claims  form part  of  the  same

constitutional case if they "derive from a common nucleus  of

operative fact" or "are such that . . .  would ordinarily  be

expected to [be] tr[ied]  . . . in one judicial  proceeding."

United                   States Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966);

see also Baker  v. Gold Seal Liquors,  417 U.S. 467, 469  n.1

(1974)                   (finding                           ancillary jurisdiction when counterclaim arises

out of the "same transaction or occurrence" as the underlying

claim);                    Rodri                        guez, 57 F.3d at 1175-76 (quoting Gibbs, 383 U.S.

at 725).   As the Magistrate Judge  noted in this case,  "the

truth  or  falsity  of the  statements  [made  at  the  press

conferences]                         for                            purposes of the defamation claim . . . turn[s]

on the same  'aggregate of operative  facts' as the  original

claim."                  33                                                                 Pe                        nobscot Indian Nation v. Key Bank, No. 94-0212-B,

33.  We do not distinguish between the counterclaims of
Schiavi, Palmer, Palmer Development, Palmer Management, and
Key Bank against PIN and the counterclaims of Key Bank
against Marcello, Phillips, and Pardilla, for purposes of our
discussion of supplemental jurisdiction.  All of the
counterclaims satisfy the "basic transaction-or-occurrence
test that is used to distinguish between compulsory and
permissive counterclaims."  6 Charles Alan Wright &amp; Arthur R.
Miller, Federal Practice and Procedure S 1404, at 32 (2d ed.
1990).  Supplemental jurisdiction exists for all of the
counterclaims in this case. 

                            -67-                                         67

at 2 (D. Me. Nov. 10, 1994); see also Painter v. Harvey,  863

F.2d 329,  333  (4th  Cir. 1988)  (finding  counterclaim  for

defamation  fell within  the  ancillary jurisdiction  of  the

district                     court);                            Pochiro                                                                      v. Prudential Ins. Co., 827 F.2d 1246,

1251 (9th cir. 1987) (finding that if "defamatory  statements

are sufficiently  related  to  [sic] subject  matter  of  the

original action," defamation  claim constitutes a  compulsory

counterclaim).

          Although our  affirmance  of the  district  court's

ruling with respect to S 81 eliminates the sole federal claim

conferring                       original jurisdiction pursuant to 28 U.S.C. S 1331,

the district court has discretion to hear the remaining state

law  claims at  issue.   "In  a  federal question  case,  the

termination of the foundational federal claim does not divest

the  district  court   of  power  to  exercise   supplemental

jurisdiction, but, rather, sets the stage for an exercise  of

the court's informed discretion."  Roche v. John Hancock Mut.

Life Ins. Co., 81 F.3d 249, 256-57 (1st Cir. 1996) (citing 28

U.S.C. S 1367(c)(3)).   As the Roche court pointed out,  "the

trial                  court                        must                            take                                 into account concerns of comity, judicial

economy, convenience, fairness, and the like" in making  this

decision.  Id.  at 257.   This determination necessitates  an

evaluation of the facts peculiar to each case.34 

34.  Finding that the district court properly considered the
state law claims at issue despite the fact that it had
disposed of the federal claim supporting original

                            -68-                                         68

          We                         emphasize                                   that the decision to retain or disclaim

jurisdiction over the remaining state law claims at issue  in

this case lies in the broad discretion of the district court.

See                              Vera-Lozano                         ,                            50                               F.3d                                    at 70; Martinez v. Colon, 54 F.3d 980,

990                (1st                     Cir.) (finding that "once the court determined so far

in advance  of  trial  that no  legitimate  federal  question

existed, the  jurisdictional  basis for  plaintiff's  pendent

claims                   under                         Puerto                               Rico                                    law evaporated"), cert. denied, 116 S.

Ct.                515                    (1995).                                                       28                               U.S.C. S 1367(c) specifically provides that

the  district  court  may  refuse  to  exercise  supplemental

jurisdiction over  a state law claim  if the claim "raises  a

novel  or  complex   issue  of  State  law,"  if  the   claim

"substantially                           predominat                                   es over the claim or claims over which

the district  court has  original jurisdiction,"  or if  "the

district court  has dismissed all  claims over  which it  has

original jurisdiction."

jurisdiction, the Roche court emphasized the following:  "The
litigation had matured well beyond its nascent stages,
discovery had closed, the summary judgment record was
complete, the federal and state claims were interconnected,
and powerful interests in both judicial economy and fairness
tugged in favor of retaining jurisdiction."  81 F. 3d at 257.

                            -69-                                         69

                         Conclusion

          These appeals present many interesting issues.   We

find the question of S 81's applicability to the transactions

at issue in this case particularly important in light of  the

evolution                      of                        federal                                Indian law and of the marketplace in which

Indian tribes actively participate.  Our conclusion that S 81

does not apply either to the Settlement Agreements or to  the

underlying                       agreements                                 governing the parties' business relations

reflects our determination not simply to dovetail with  those

authorities that have offered persuasive interpretations of S

81 before us, but further to reach a logical conclusion  that

promotes the interests of Indian tribes as they grapple  with

modern                   economic                           realities.  We believe that in so doing we also

give effect to  the intentions of those  who adopted S 81  in

1872.

          We affirm in part, reverse and vacate in part,  and

remand                   to                      the                         district                                  court for further proceedings consistent

with this opinion.  Costs to Appellees and cross-Appellants.

                            -70-                                         70
