Court Opinion

ID: 8410312
Source: CourtListenerOpinion
Date Created: 2022-11-02 17:59:18.347571+00
Date Added: 2024-06-11T16:47:46.077375
License: Public Domain

DENNIS, Circuit Judge,
concurring:
I join the majority opinion and write separately only to assign additional reasons for concluding that the state-law tort claims that Supreme Beef attempts to bring in this case are not “property of the estate” that can be asserted as a setoff under section 106(c) of the Bankruptcy Code. In my view, the resolution of this question, which turns on the proper characterization of the Federal Tort Claims Act (the “FTCA”), is critical to the result in this ease. Because the FTCA is something more than a mere limited waiver of the federal government’s sovereign immunity, I agree with the majority that the waiver of sovereign immunity contained in section 106(c) does not permit a debtor to assert in bankruptcy state-law tort claims that would otherwise be barred by the “substantive” exceptions to the FTCA. See 28 U.S.C. § 2680.
Liability may be imposed upon the United States only if two requirements are met: (1) there must be a waiver of sovereign immunity; and (2) there must be a source of substantive law that provides a claim for relief. See FDIC v. Meyer, 510 U.S. 471, 483-84, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). The FTCA fulfills both of those requirements, as it waives the federal government’s immunity from suit and provides that the United States shall be liable for the torts of its employees under certain circumstances. See 28 U.S.C. §§ 1346(b)(1), 2674; Richards v. United States, 369 U.S. 1, 6, 82 S.Ct. 585, 7 L.Ed.2d 492 (1962) (“The Tort Claims Act was designed primarily to remove the sovereign immunity of the United States from suits in tort and, with certain specific exceptions, to render the Government liable in tort as a private individual would be under like circumstances.”). For the most part, the FTCA pegs the scope of governmental tort liability to the content of applicable state law, but Congress undoubtedly possesses the authority to displace state law and place federal limits and conditions on the federal government’s tort liability, see Richards, 369 U.S. at 7, 14, 82 S.Ct. 585, and it has exercised that authority at various places in the FTCA. For example, the FTCA establishes a federal statute of limitations that applies irrespective of the relevant state limitations period, see 28 U.S.C. § 2401(b); it sets limitations on the remedies available against the United States, see id. § 2674; it provides that it is the exclusive remedy for tort recovery against the United States, see id. § 2679(b)(1); and, most importantly for this case, it categorically excludes liability for many types of claims, including claims *261based on a discretionary governmental function, claims arising in a foreign country, and claims “arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights.” Id. § 2680. Moreover, in developing the jurisprudence under the FTCA, the federal courts have used a mixture of federal, state and hybrid concepts. See Devlin v. United States, 352 F.3d 525, 532-34 (2d Cir.2003) (discussing “hybrid,” “purely federal” and “purely state-law-derived” approaches to defining different FTCA statutory terms).
While the rules of decision in suits brought under the FTCA are derived principally from the law of the states, a substantial number of purely federal and hybrid precepts are also integral to the body of law known as the FTCA. Consequently, the FTCA claim for relief, which is subject to all of the above-described federal principles, limitations and more, is not exclusively a state-law claim in any realistic sense. Similarly, where a party is prevented from recovering from the United States by, for example, the FTCA’s discretionary function exception, he does not possess a state-law cause of action that is simply barred by the United States’ sovereign immunity; rather, his claim is barred, or effectively preempted, by a substantive limitation imposed by federal law. Thus, although section 106(c) of the Bankruptcy Code contains a waiver of sovereign immunity, that section cannot be read to dispense with the substantive principles and limitations that the FTCA imposes on the liability of the United States. To hold otherwise would require us to construe section 106(c) as not only waiving sovereign immunity, but also altering the essential nature of tort claims against the United States and significantly expanding the substantive liability of the federal government for tort claims asserted in a bankruptcy proceeding. Congress presumably has the authority to enact such sweeping substantive changes, but the current section 106, which speaks only in terms of sovereign immunity and expressly disclaims the creation of any “substantive claim for relief or cause of action,” 11 U.S.C. § 106(a)(5), does not do so. Accordingly, I join the majority’s opinion.