United States v. Nordic Village, Inc.
503 U.S. 30

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OCTOBER TERM, 1991

Syllabus

UNITED STATES v. NORDIC VILLAGE, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

No. 90-1629. Argued December 9, 1991-Decided February 25,1992

Mter respondent Nordic Village, Inc., filed a petition for relief under Chapter 11 of the Bankruptcy Code, one of its officers withdrew funds from the company's corporate account. He sent part of the money to the Internal Revenue Service (IRS), directing it to apply the funds against his individual tax liability, which it did. In a subsequent adversary proceeding, the Bankruptcy Court permitted Nordic Village's trustee to recover the transfer and entered a monetary judgment against the IRS. The District Court affirmed, as did the Court of Appeals, which rejected a jurisdictional defense that sovereign immunity barred the judgment.

Held:

1. Section 106(c) of the Code does not waive the United States' sovereign immunity from an action seeking monetary recovery in bankruptcy. Pp. 32-37.

(a) Hoffman v. Connecticut Dept. of Income Maintenance, 492 U. S. 96, does not control this case, since the plurality and the dissent therein were evenly divided over the issue whether § 106(c) authorizes a monetary recovery against a State, and since the deciding vote of the concurrence, denying amenability to suit, rested upon the Eleventh Amendment, which is applicable only to the States. However, the plurality's reasoning is relevant and is relied on here. pp. 32-33.

(b) Section 106(c) does not "unequivocally express" a waiver of the Government's immunity from actions for monetary relief, as is necessary for such a waiver to be effective. See, e. g., Irwin v. Department of Veterans Affairs, 498 U. S. 89, 95. In contrast to §§ 106(a) and (b), which plainly waive immunity with regard to monetary relief as to specified claims, § 106(c) is susceptible of at least two plausible interpretations that do not authorize monetary relief. Legislative history has no bearing on this point, for the "unequivocal expression" of waiver must be an expression in statutory text. Hoffman, supra, at 104. Pp. 33-37.

2. Respondent's several alternative grounds for affirming the judgment below-that 28 U. S. C. § 1334(d)'s broad jurisdictional grant provides the necessary waiver, that a bankruptcy court's in rem jurisdiction overrides sovereign immunity, and that a waiver of sovereign immunity is supported by trust law principles-are unpersuasive. Pp. 37-39.

915 F.2d 1049, reversed.


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SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and WHITE, O'CONNOR, KENNEDY, SOUTER, and THOMAS, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 39.

Richard H. Seamon argued the cause for the United States. With him on the briefs were Solicitor General Starr, Assistant Attorney General Peterson, Deputy Solicitor General Roberts, Gary D. Gray, and John A. Dudeck, Jr.

Marvin A. Sicherman argued the cause and filed a brief for respondent. With him on the brief was Michael D. Zaverton.

JUSTICE SCALIA delivered the opinion of the Court.

This case presents a narrow question: Does § 106(c) of the Bankruptcy Code waive the sovereign immunity of the United States from an action seeking monetary recovery in bankruptcy?

I

Respondent Nordic Village, Inc., filed a petition for relief under Chapter 11 of the Bankruptcy Code in March 1984. About four months later, Josef Lah, an officer and shareholder of Nordic Village, drew a $26,000 check on the company's corporate account, $20,000 of which was used to obtain a cashier's check in that amount payable to the Internal Revenue Service (IRS). Lah delivered this check to the IRS and directed it to apply the funds against his individual tax liability, which it did.

In December 1984, the trustee appointed for Nordic Village commenced an adversary proceeding in the Bankruptcy Court for the Northern District of Ohio, seeking to recover, among other transfers, the $20,000 paid by Lah to the IRS. The Bankruptcy Court permitted the recovery. The unauthorized, postpetition transfer, the court determined, could be avoided under § 549(a) and recovered from the IRS under § 550(a) of the Bankruptcy Code. It entered a judgment against the IRS in the amount of $20,000, which the District Court affirmed.


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Full Text of Opinion

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