United States v. Nordic Village, Inc.

After 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.

'''[p. 31]''' 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.