Opinion ID: 50245
Heading Depth: 2
Heading Rank: 3

Heading: Application of Hood and Katz

Text: 12 Applying Hood and Katz to the instant case, we conclude that the State here has no claim to sovereign immunity. Whatever uncertainty there may be as to the outer limits of the holdings of Katz and Hood, at the very least they together establish beyond cavil that an in rem bankruptcy proceeding brought merely to obtain the discharge a debt or debts by determining the rights of various creditors in a debtor's estate—such as is brought here—in no way infringes the sovereignty of a state as a creditor. 25 13 There can be no serious question that the proceeding at issue here is purely in rem: The bankruptcy court's exercise of jurisdiction is focused only on Soileau's estate. Katz describes three crucial facets of the exercise of in rem jurisdiction that prevent it from interfering with state sovereign immunity: (1) exercise of jurisdiction over the estate of the debtor, (2) equitable distribution of the estate's property among creditors, and (3) discharge. 26 In this case, the State challenges the in rem discharge of a debt, a specie of imposition on the states' sovereignty undeniably countenanced by Katz and Hood. 14 To the extent that Hood implies in a footnote that there could possibly be some exercise of in rem jurisdiction that conceivably might offend the sovereignty of the state, 27 such concerns are not present here. 28 Indeed, Soileau's is even a stronger case for rejection of the State's sovereign immunity defense than was Hood 's or Katz 's. Hood, after all, addressed an adversarial proceeding involving a state, and Katz addressed an order for the avoidance of preferential transfers to a state to allow the trustee to recoup those transfers from the state's treasury— each proceeding carrying with it some of the trappings traditionally associated with a suit against a state. Soileau's, in contrast, carries none: She is neither seeking the return of any funds already in the State's possession nor bringing an adversarial proceeding against the State. She asks nothing more than that the bankruptcy court exercise its in rem jurisdiction over her bankruptcy estate by adjudicating the rights of the State as a creditor. As such an exercise of in rem jurisdiction is indisputably contemplated by Katz, 29 the State's sovereign immunity claim must fail.