Legal Document

503 U.S. 30 112 S.Ct. 1011 117 L.Ed.2d 181 UNITED STATES, Petitionerv.NORDIC VILLAGE, INC., David O. Simon, Trustee. No. 90-1629. Argued Dec. 9, 1991. Decided Feb. 25, 1992. Syllabus After respondent Nordic Village, Inc., filed a petition for relief under Chapter 11 of the Bankruptcy Code, one its officers withdrew funds from company's corporate account. He sent part money to Internal Revenue Service (IRS), directing it apply against his individual tax liability, which did. In subsequent adversary proceeding, Court permitted Village's trustee recover transfer and entered monetary judgment IRS. The District affirmed, as did Appeals, rejected jurisdictional defense that sovereign immunity barred judgment. Held: 1. Section 106(c) Code does not waive United States' an action seeking recovery in bankruptcy. Pp. 32-37. (a) Hoffman v. Connecticut Dept. Income Maintenance, 492 96, 109 2818, 106 76, control this case, since plurality dissent therein were evenly divided over issue whether § authorizes State, deciding vote concurrence, denying amenability suit, rested upon Eleventh Amendment, is applicable only States. However, plurality's reasoning relevant relied on here. 32-33. (b) "unequivocally express" waiver Government's actions relief, necessary such be effective. See, e.g., Irwin Department Veterans Affairs, 498 ----, 111 453, 457, 435. contrast 106(a) (b), plainly with regard specified claims, susceptible at least two plausible interpretations do authorize relief. Legislative history has no bearing point, "unequivocal expression" must expression statutory text. Hoffman, supra, U.S., 104, S.Ct., 2824. 33-37. 2. Respondent's several alternative grounds affirming below—that 28 U.S.C. 1334(d)'s broad grant provides waiver, bankruptcy court's rem jurisdiction overrides immunity, supported by trust law principles—are unpersuasive. 37-39. 915 F.2d 1049 (CA6 1990), reversed. SCALIA, J., delivered opinion Court, REHNQUIST, C.J., WHITE, O'CONNOR, KENNEDY, SOUTER, THOMAS, JJ., joined. STEVENS, dissenting opinion, BLACKMUN, Richard H. Seamon, Washington, D.C., petitioner. Marvin A. Sicherman, Cleveland, Ohio, respondents. Justice SCALIA Court. 1 This case presents narrow question: Does States bankruptcy? 2 * Respondent Inc. March 1984. About four months later, Josef Lah, officer shareholder drew $26,000 check account, $20,000 was used obtain cashier's amount payable (IRS). Lah IRS directed 3 December 1984, appointed Village commenced proceeding Northern recover, among other transfers, paid recovery. unauthorized, postpetition transfer, court determined, could avoided 549(a) recovered 550(a) Code. It $20,000, district affirmed. 4 A panel Appeals Sixth Circuit (1990). upheld lower courts (raised first time appeal) Government. We granted certiorari. 501 2823, 115 994 (1991). II 5 provides: 6 "(a) governmental unit deemed have waived respect any claim property estate arose out same transaction or occurrence unit's arose. 7 "(b) There shall offset allowed interest estate. 8 "(c) Except provided subsections section notwithstanding assertion immunity— 9 "(1) provision title contains 'creditor,' 'entity,' 'governmental unit' applies units; 10 "(2) determination arising binds units." 106. Three Terms ago we construed 76 (1989). there State. held not, though Justices supporting failed agree why. determined permit Id., 102, 2823 (WHITE, joined O'CONNOR JJ.). That conclusion, said, compelled language 106(c), relationship between subsection rest statute, requirement congressional abrogation Amendment clearly expressed. concurrence found unnecessary construe concluding Congress lacks authority Clause abrogate money-damages actions. 105, 2824 (SCALIA, concurring judgment). Like here, particularly paragraph (c)(1), supplies waiver. 106, 2825 (Marshall, Brennan, 12 Contrary suggestion, today's decision. true, sure, made clear (insofar within Congress's power) State Federal Sovereigns are treated purposes. See 101(27) (1982 ed., Supp. II) (" means [and] State"). Since, however, what treatment States; ground (the Amendment) Government, see FHA Burr, 309 242, 244, 60 488, 490, 84 L.Ed. 724 (1940); holding binding force separate opinions dealing question relevant, fact rely plurality. III 13 Waivers effective, " ' expressed." 435 (1990) (quoting Mitchell, 445 535, 538, 100 1349, 1351, 63 607 (1980), King, 395 1, 4, 89 1501, 1503, 23 52 (1969)). respondent's moreover, they generally "liberally construed." occasion narrowly exceptions waivers where consistent intent, context "sweeping language" Tort Claims Act, Yellow Cab Co., 340 543, 547, 71 399, 402, 95 523 (1951), see, id., 554-555, 406-407, Block Neal, 460 289, 298, 103 1089, 1094, 75 67 (1983), Aetna Casualty & Surety 338 366, 383, 70 207, 216, 94 171 (1949), equally "sue sued" clauses, Franchise Tax Board California Postal Service, 467 512, 517-519, 104 2549, 2552-2553, 81 446 (1984), 245, 490. These cases eradicate traditional principle consent sued "must 'construed strictly favor sovereign,' McMahon States, 342 27 [72 17, 19, 96 26] 'enlarge[d] . beyond requires,' Ruckelhaus Sierra Club, 463 680, 685, 3274, 3278, 77 938 (1983) Eastern Transp. Co. 272 675, 686, 47 291, 472 (1927)), rule construction had reaffirm once already Term, Ardestani INS, 502 ---- - 515, 116 496 14 Subsections meet liability. Addressing "claim[s]," defines "right[s] payment," 101(4)(A), settings: compulsory counterclaims 106(a); permissive claims capped setoff limitation, 106(b). Next these models clarity stands (c). Though it, too, waives fails establish unambiguously extends claims. 15 Under interpretation, permits "declaratory injunctive"—though 2823. conclusion reached reading paragraphs (c) complementary rather than independent: identifies subject matter disputes may entertain second describes disputes. say, specifies manner applied units provisions identified paragraph, i.e., declaratory injunctive but affirmative 16 Several factors construction. distinction establishes—between suits relief—is familiar one, suggested contrasting ("claim[s]") ("determination[s]" "issue[s]"), also avoids eclipsing carefully drawn limitations placed (b). principal permitting persons itself 542(b), "an entity owes debt matured, demand, order, pay to, order of, trustee," 542(b). If that, reason use trigger-word "entity," all respects units, then Government alleged debts, despite prior specification will lie when proof claim, even unless counterclaim. Those earlier reduced trivial application if (c)(1) own. 101-102, 2822-2823. attaches practical consequences (c)(2), whereas interpretation violates settled statute must, possible, fashion every word some operative effect. 103, 2823; Menasche, 348 528, 538-539, 513, 519-520, 99 615 (1955). function performed (2) (1) operates treat like "entity" "creditor," regardless type authorized provision. 17 authorizing would nevertheless perform significant function. determine dischargeability estate's liability unpaid federal taxes, 505(a)(1) (permitting "determine legality tax") (emphasis added), claim. 102-103, Cf. Neavear Schweiker, 674 1201, 1203-1204 (CA7 1982) (holding discharge owed Social Security Administration). repeatedly objected, being bound determinations before enacted 1978. McKenzie 536 726, 728-729 1976); Bostwick 521 741, 742-744 (CA8 1975); Gwilliam 519 407, 410 (CA9 re Durensky, 377 F.Supp. 798, 799-800 (ND Tex.1974), appeal dism'd, 1024 (CA5 1975). 18 Subsection another read independent, limiting first, then, pursuant using triggering words enumerated fully units. But those limited requirements accordance phrase introduces ("Except section"). exception, words, mean rules established "claim[s]" "property estate" exclusive, preclude resort purpose. bar present right 550 "claim" (defined 101(4)(A)) 541(a)(3)). (The appears (c)(2) independent explanation textual exception reading.) 19 foregoing assuredly readings (c), ones—which enough imposing "unambiguous" therefore should adopted. legislative ambiguity point. As context, 2824, elimination insist exist there, cannot supplied committee report. Dellmuth Muth, 491 223, 228-229, 2397, 2400, 105 IV 20 proposes below, First, can 1334(d), grants initiated "exclusive property, wherever located, debtor commencement estate." urges us empowering compel return including money, passes into proceeding. theory, sovereign's exposure suit governed specific concealed 1334(d). Besides unprecedented running afoul unequivocal-expression requirement, theory closely resembles argument just last Term. Blatchford Native Noatak, 2578, 2585, 686 (1991), Alaska's abrogated 1362, grant, akin gives "all civil actions, brought Indian tribe aris[ing] Constitution, laws, treaties States." Rejecting contention, observed: "The hear suffice show defenses issues wholly distinct." n. 4. 21 Equally unpersuasive related immunity. initial matter, premise missing invoke, purport exercise, jurisdiction. sought sum "particular dollars," cf. Begier IRS, 53, 62, 110 2258, 2264, 46 deleted), so res attached, Pennsylvania Turnpike Comm'n McGinnes, 268 65, 66-67 (CA3), cert. denied, 361 829, 80 78, (1959). event, never sovereign-immunity recovery, exists, Shaw, 495, 502-503, 659, 662, 888 (1940). Nor Whiting Pools, 462 198, 2309, 515 otherwise requested turn tangible seized protection. payment Treasury quite different retained ownership. Court's Pools discussion nothing suggests granting proper. 22 Resort principles help respondent. Most decisions cites irrelevant, involve private entities, Bull 295 247, 55 695, 79 1421 (1935), concerns equitable recoupment, doctrine been substantially narrowed later cases, Dalm, 494 596, 608, 1361, 1368, 108 548 (1990), 24 Neither nor establishes unequivocal trustee's Since empowered 25 ordered. 26 whom BLACKMUN joins, dissenting. injustice condones today demonstrates reexamine wisdom judge-made drive An insolvent corporation appropriated them personal obligation. Because ultimate recipient stolen holds avoid transfer. rigid outweighs general creditors shareholders debtor. result neither just. 29 because both text support contrary result. more misguided adherence obsolete stake. I comment laws ordained. straightforward. either counterclaim offset, applicable. 31 32 33 106(c). 34 "governmental unit,"1 "trigger words" listed subparagraph undoubtedly provision.2 Thus, "notwithstanding immunity," "applies" literal Act unquestionably forecloses 35 intended literally. immediate purpose enable debtor's liabilities, sponsors amendment stated covered "other matters well," specifically avoidance preferential transfers. 124 Cong.Rec. 32394 (1978) (statement Rep. Edwards); 33993 Sen. DeConcini).3 pellucidly clear. 36 evades hypothesizing "plausible" constructions statute,4 refusing consider history,5 reiterating view construed.6 alternatives except note obviously less satisfactory—both sound policy principled English language—than statute. shall, add few about love affair 37 Despite ancient lineage, sometimes favored7 disfavored.8 Its original reliance notion divinely ordained monarch "can wrong"9 is, course, thoroughly discredited.10 Moreover, persistent threat impartial administration justice acknowledged recognized.11 (1940), remarked "the current disfavor suit."12 38 Time after taken ameliorate hardship doctrine. half century 39 "A sense progressive relaxation enactments rigor rule. representative governments attempt inequalities necessities permit, prerogatives government yield needs citizen. When given, liberally 501, 661, 40 noted why differently secured creditor.13 interests adequately protected governing discharges priorities. Commission Laws observed, unanimously, 1973: 41 recommends taxes entitled priority accruing three years year given (including 'tax lien'). Data submitted total collected liens priorities proceedings insignificant budget. unseemly collecting expense taxpayer, possible justification plea necessity keep functioning. indicated above, totally without foundation fact. 42 ". enters business transactions, prepared deal basis equality bankrupt business." Report H.R.Doc. 93-137, pt. p. (1973). 43 comments experts who played major role formulating policies embodied believe are—one ask valid supports "strict" examine history. 44 Surely requiring draft legislation greater precision justify refusal make good faith effort ascertain actual meaning message tried convey books. stubborn insistence "clear statements" burdens reenactment plain literally.14 cost litigants, legislature, public large, sort judicial lawmaking substantial unfortunate. impact citizens engaged litigation tragic. 45 ample power correct unfortunate error obey command. respectfully dissent. term unit" include "United [and any] department, agency, instrumentality (1988 II). section, extent 544, 545, 548, 549, 553(b), 724(a) title, benefit estate, transferred, or, orders, value from— transferee whose made; mediate transferee." 550(a). material summarized quoted my 111-114, 2827-2829, Particularly sponsors' '§ possession assert avoiding powers Title unit,' 112, 2828, 'the transfers,' 113, 2828. Ante, 34-37. 37. 34. Library 478 310, 318, 2957, 2963, 92 250 (1986) 'The express, construed' ") N.Y. Rayon Importing 329 654, 601, 604, 91 577 (1947)); Ruckelshaus ("Waivers requires' "); Sherwood, 312 584, 590, 61 767, 771, 85 1058 (1941) (Because "a relinquishment interpreted," "conservatism"). exemption involves withheld. refinement announced' Anderson Hayes Constr. 243 140, 147, 153 N.E. 28, 29-30 (1926) (Cardozo, J.)); Towing 350 61, 69, 122, 126, 48 (1955) (Frankfurter, J.) (Court self-constituted guardian import back designed limit it"); Canadian Aviator, Ltd. 324 215, 222, 65 639, 643, 901 (1945) thwart "broad suit" unduly restrictive interpretation"). W. Blackstone, Commentaries *246. Nevada Hall, 440 410, 415, 1182, 1185, 59 416 (1979) fiction king wrong "was colonists declared their independence Crown"); Langford 101U.S. 341, 343, 1010 (1880) ("We understand maxim [that wrong] existence country"). Davis, Sovereign Immunity Must Go, Admin.L.Rev. 383-384, 389-393 (1969); Pugh, Historical Approach Doctrine Immunity, La.L.Rev. 476, (1953); Borchard, Liability Tort, Yale L.J. 1-2, 31, (1924). Many legal scholars similarly critical Comment, Immunity—An Anathema "Constitutional Tort," Santa Clara Law. 553, (1972) (collecting authorities); Cramton, Nonstatutory Review Administrative Action: Need Statutory Reform Subject Matter Jurisdiction, Parties Defendant, 68 Mich.L.Rev. 387, 418-419 (1970); supra 11; 11, 494. Recognizing lack inequities caused judicially created doctrine, state local governments. Note, Rethinking Bivens, 57 N.Y.U.L.Rev. 597, 603, (1982) cases). 209, 2315, reorganization includes creditor filing reorganization." explained: "We creditor. 542(a) expressly states 542(a), unit. 101(14). Tr. Oral Arg. 16. considered effect new collection, S.Rep. 95-1106 (Report Senate Finance Committee), decided provide protection collectors, through enhanced unsecured 507(a)(6), nondischarge 523(a)(1). 95-989, pp. 14-15 U.S.Code Cong. Admin.News 1978 5787, 5800, 5801. collectors enjoy 363(e) adequate liens. Nothing indicates special collector form exclusion satisfy lien." Ibid. One scholar's countermajoritarian thrust fascination statement illustrative: "In [491 (1989) ] Education Handicapped (EHA) 1975 imposed substantive obligations directly states, included assuming sued. Supreme changed 1985, responded 1986 statutes protecting disabled. Yet Dellmuth, EHA stringent test abrogation, Congress' 'intent' lawsuits 1986. overrode 1990. pass times achieve goal striking." Eskridge, Overriding Interpretation Decisions, 101 331, 409-410 (1991) (footnotes omitted).

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