Hoffman v. Conn. Dept. Of Inc. Maint., 492 U.S. 96 (1992)

Hoffman v. Connecticut Department of Income Maintenance

No. 88-412

Argued April 19, 1989
Decided June 23, 1989
492 U.S. 96

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

Syllabus

Section 106(c) of the Bankruptcy Code provides that, "notwithstanding any assertion of sovereign immunity," any provision of the Code that contains "`creditor,’ `entity,’ or `governmental unit’ applies to governmental units," § 106(c)(1); and that "a determination by the court of an issue arising under such a provision binds governmental units," § 106(c)(2). Petitioner Hoffman, the bankruptcy trustee in two unrelated Chapter 7 proceedings, filed separate adversarial proceedings in the Bankruptcy Court. One was a "turnover" proceeding under § 542(b) against respondent Connecticut Department of Income Maintenance to recover Medicaid payments owed for services rendered by a bankrupt convalescence home. The other, filed against respondent Connecticut Department of Revenue Services, sought under § 547(b) to avoid the payment of state taxes, interest, and penalties as a preference, and to recover an amount already paid. Respondents moved to dismiss both actions as barred by the Eleventh Amendment. The Bankruptcy Court denied the motions on the ground that Congress, in enacting § 106(c), had abrogated the States’ Eleventh Amendment immunity from actions under §§ 542(b) and 547(b), which contain the "trigger" words enumerated in § 106(c)(1), and that Congress had authority to do so under the Bankruptcy Clause of the Constitution. The state respondents appealed to the District Court, and respondent United States intervened. The District Court reversed without reaching the issue of congressional authority. The Court of Appeals affirmed, concluding that § 106(c)’s plain language abrogates sovereign immunity only to the extent necessary to determine a State’s rights in the debtor’s estate, and does not abrogate such immunity from recovery of an avoided preferential transfer of money or from a turnover proceeding.

Held: The judgment is affirmed.

850 F.2d 50, affirmed.

JUSTICE WHITE, joined by THE CHIEF JUSTICE, JUSTICE O’CONNOR, and JUSTICE KENNEDY, concluded that, in enacting § 106(c), Congress did not abrogate the Eleventh Amendment immunity of the States. Congress has not made an intention to abrogate unmistakably clear in the provision’s language. The narrow scope of the waivers of sovereign immunity as to certain particular claims in §§ 106(a) and (b) make it unlikely that Congress adopted in § 106(c) a broad abrogation of immunity making States subject to all provisions of the Code containing any of the trigger words. If it did, § 106(c) would apply to over 100 Code provisions. Section 106(c)(2), joined to subsection (c)(1) by the conjunction "and," narrows the type of relief to which the section applies, since, unlike §§ 106(a) and (b), it does not provide an express authorization for monetary recovery from the States. Thus, a State that files no proof of claim would be bound, like other creditors, by a discharge of debts, including unpaid taxes, but would not be subject to monetary recovery. Under this construction, the language "notwithstanding any assertion of sovereign immunity" waives the immunity of the Federal Government, so that it is bound by the Bankruptcy Court’s determination of issues even when it did not appear and subject itself to such court’s jurisdiction. In contrast, under petitioner’s argument that the sections containing the trigger words supply the authorization for monetary recovery, § 106(c) would have exactly the same effect if subsection (c)(2) had been omitted. This Court is not persuaded that the use of the word "determine" in the Code’s jurisdictional provision, 28 U.S.C. § 157(b)(1), is to the contrary. That provision authorizes bankruptcy judges to determine "cases" and "proceedings," not issues, and to "enter appropriate orders and judgments," not merely to bind governmental units by their determinations. Petitioner’s reliance on § 106(c)’s legislative history and the policies underlying the Bankruptcy Code is also misplaced, since they are not based on the text of the statute, and thus cannot be used to determine whether Congress intended to abrogate the Eleventh Amendment. Pp. 100-104.

JUSTICE SCALIA, although concluding that petitioner’s actions are barred by the Eleventh Amendment, would affirm the Court. of Appeals’ judgment on the ground that Congress had no power to abrogate the States’ Eleventh Amendment immunity. It makes no sense to affirm the constitutional principle that the judicial power of the United States does not extend to a suit directly against a State by one of its citizens unless the State itself consents to be sued, and to hold, at the same time, that Congress can override the principle by statute in the exercise of its Article I powers. P. 105.

WHITE, J., announced the judgment of the Court and delivered an opinion, in which REHNQUIST, C.J., and O’CONNOR and KENNEDY, JJ., joined. O’CONNOR, J., filed a concurring opinion, post, p. 105. SCALIA, J., filed an opinion concurring in the judgment, post, p. 105. MARSHALL, J., filed a dissenting opinion, in which BRENNAN, BLACKMUN, and STEVENS, JJ., joined, post, p. 106. STEVENS, J., filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 111.