United States v. Miller, 145 S.Ct. 839

Background

All Resort Group, a Utah-based company, went bankrupt after its shareholders used company funds to pay off their personal federal tax debts.
The bankruptcy trustee (Miller) sought to use §544(b) of the Bankruptcy Code to "avoid" or recover the $145,000 transferred to the IRS for the benefit of the bankruptcy estate.
Miller relied on Utah's fraudulent-transfer statute as the “applicable law” to support the claim under §544(b).
The federal government argued the action was barred because, outside of bankruptcy, sovereign immunity would shield the United States from Utah state-law fraudulent-transfer suits.
Lower courts (Bankruptcy, District, and the Tenth Circuit) held for the trustee, ruling that §106(a) of the Bankruptcy Code waived the Government’s sovereign immunity "with respect to" §544(b), including for state-law claims nested in §544(b).
The Supreme Court granted certiorari to resolve a split among Circuits on whether §106(a) waives sovereign immunity for underlying state-law causes of action in trustee §544(b) claims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does §106(a) abrogate sovereign immunity for both §544(b) claims and nested state-law causes of action?	§106(a)'s sovereign immunity waiver applies broadly to §544(b) and all underlying state-law claims invoked by trustees.	§106(a) waives immunity only for the federal cause of action (§544(b)), not for state-law causes; immunity blocks the claim if no actual unsecured creditor could sue outside bankruptcy.	No—waiver applies only to the §544(b) claim itself, not to any underlying state-law cause of action.
Does §106(a) modify the substantive requirements of §544(b)?	Yes; §106(a) should be read to abrogate immunity for all elements of a §544(b) claim, including the actual creditor requirement under “applicable law.”	No; §106(a) is jurisdictional only and expressly does not create any new substantive rights or claims for relief.	No—it is jurisdictional only; it does not alter §544(b)’s substantive requirements or the actual creditor requirement.
Should narrow construction of sovereign immunity waivers control interpretation?	No; the broad “with respect to” language in §106(a) shows Congress intended an expansive waiver.	Yes; longstanding precedent requires waivers be construed strictly in favor of the sovereign.	Yes; any ambiguity in scope must be resolved in favor of the government.
Does §106(a) serve a meaningful purpose if it does not abrogate immunity for underlying state law?	No; it would render waivers for §544(b) toothless because trustees could never win against the Government.	Yes; §106(a) still enables suits under §544(a) and against state governments that have consented to suit.	Yes; it provides jurisdiction for some §544 claims and claims against consenting states.

Key Cases Cited

United States v. Detroit Timber & Lumber Co., 200 U.S. 321 (Supreme Court explains the nature of the syllabus for opinions)
FDIC v. Meyer, 510 U.S. 471 (Sovereign immunity is jurisdictional in nature)
United States v. Mitchell, 463 U.S. 206 (Waivers of sovereign immunity are prerequisites for jurisdiction, not new substantive rights)
United States v. Testan, 424 U.S. 392 (Jurisdictional waivers do not create substantive rights)
FAA v. Cooper, 566 U.S. 284 (Ambiguities in waivers of sovereign immunity are resolved in favor of the government)
Davis v. Michigan Dept. of Treasury, 489 U.S. 803 (Statutory terms must be read in context of the overall statutory scheme)
Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (Issues not raised below generally will not be considered on appeal)