Buchwald Capital Advisors, LLC v. Papas (In re Greektown Holdings, LLC)
532 B.R. 680
E.D. Mich.2015Background
- Greektown Holdings filed Chapter 11; an adversary MUFTA action alleged $177 million in fraudulent transfers to multiple defendants, including the Sault Ste. Marie Tribe and Kewadin Casinos.
- The Tribe moved to dismiss on sovereign-immunity grounds, and the Bankruptcy Court bifurcated (1) whether Congress abrogated tribal immunity in 11 U.S.C. §106(a) and (2) whether the Tribe waived immunity by participating in the bankruptcy.
- After settlement efforts failed, the Tribe renewed its motion; the Bankruptcy Court denied dismissal, concluding §106(a), read with the definition of “governmental unit” in §101(27) (which includes “other … domestic government”), unequivocally abrogated tribal immunity.
- The Tribe appealed to the district court, arguing Congress did not clearly and expressly abrogate tribal sovereign immunity because the Code never mentions “Indian tribes.”
- The district court reversed, holding that the generic catchall “other … domestic government” is ambiguous as to tribes and Supreme Court precedent requires an unequivocal textual abrogation; the case was remanded to address only whether the Tribe waived immunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §106(a) of the Bankruptcy Code abrogates tribal sovereign immunity by referencing "governmental unit" and §101(27)'s catchall "other ... domestic government" | Trustee: "domestic government" plainly includes Indian tribes; Congress need not use words "Indian tribe" to abrogate immunity | Tribe: Congress must unmistakably and textually abrogate tribal immunity; a generic phrase is ambiguous and insufficient | The district court held §106(a) does not clearly and unequivocally abrogate tribal sovereign immunity via the catchall phrase; reversal of the Bankruptcy Court and remand for waiver inquiry |
| Whether courts may "deduce" inclusion of tribes from a generic statutory category rather than require explicit mention | Trustee: deduction is permitted (Krystal reasoning); similar to abrogation of state immunity by generic terms | Tribe: deduction/inference is forbidden by Supreme Court precedent (ambiguities construed for tribes) | Held that deduction here is insufficient because it leaves ambiguity; favor tribes absent clear textual abrogation |
| Whether Supreme Court precedent permits reliance on non-textual evidence or inferences to find abrogation | Trustee: contextual and historical usage of "domestic" and "government" support inclusion of tribes | Tribe: Dellmuth/Atascadero and Santa Clara Pueblo require an unmistakably clear textual statement; legislative history or inference cannot substitute | Held that abrogation must be textual and unmistakable; inferences or legislative history are inadequate |
| Remedy / next step after finding no abrogation in §106(a) | Trustee: proceed with claims against Tribe (contending waiver or other theories) | Tribe: if immunity not abrogated, claims must be dismissed absent waiver | Court reversed denial of dismissal and remanded to Bankruptcy Court to decide limited factual question whether the Tribe waived sovereign immunity |
Key Cases Cited
- Kiowa Tribe of Okla. v. Mfg. Techs., 523 U.S. 751 (1998) (tribal sovereign immunity is a common-law doctrine that bars suit absent congressional abrogation or tribal waiver)
- Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978) (Congress must unequivocally waive or abrogate tribal immunity; ambiguities resolve for tribes)
- Michigan v. Bay Mills Indian Cmty., 134 S. Ct. 2024 (2014) (reaffirmed breadth of tribal sovereign immunity and that changes rest with Congress)
- Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055 (9th Cir. 2004) (held §106(a) and §101(27) abrogated tribal immunity by including tribes in "domestic governments")
- Atascadero State Hosp. v. Scanlon, 473 U.S. 234 (1985) (abrogation of state immunity must be unmistakably clear in statutory text; generic phrases insufficient)
- Dellmuth v. Muth, 491 U.S. 223 (1989) (reaffirmed textual requirement for abrogation and rejected reliance on legislative history or inference)
- Kimel v. Fla. Bd. of Regents, 528 U.S. 62 (2000) (statutory definitions elsewhere in a statute can clarify whether a generic term covers sovereign entities)