Chandler v. Oklahoma Ex Rel. Oklahoma Tax Commission (In Re Chandler)

$2,000.00. pay merit- to the Marvels the sum of Chandler was disqualify motion less, appeared to for the Marvels shall submit an Counsel but because pur improper appropriate for an form of order. brought that it was brought motion pose. Where a argu legal a colorable

improper purpose, avoiding sanctions.

ment basis Industries, Captain’s Ltd.

Mark v. Sea

Choice, Cir.

1995). ap- and appeared the court still

It denials, court, pears despite Keck’s CHANDLER, Debtor. Kenneth O. her be- largely that Keck made motion she not like Chandler. cause does Chandler, squared long-

two off least in at one Kenneth Plaintiff- O. standing appeared times Appellee, There more like feud than case law. certainly lost and no love between Keck Chandler, but that was no reason for Keck ex of Oklahoma rel. Marvels, their limited re- put with Commission, Defendant- sources, dispute in middle of a Appellant. way no them. BAP NO-00-016. No. addition, it now seems clear Bankruptcy No. 99-01929. just

Keck was motivated more than Adversary No. 99-0173. clearly dislike for Chandler. wor- She ried activ- about Chandler’s interest her Bankruptcy Appellate Panel client, of her and her ities those saw of the Tenth Circuit. strike,” “pre-emptive motion as sort of investigation make Chandler’s Aug. discourage him perhaps more difficult and taking any action. further Such justifiable simple motive is more than

dislike. Findings

V. and Conclusion arguments pleadings

From

Keck, plus her the court’s observation of

conduct this case and in others before court, mo- court finds that Keck’s

tion disqualify Chandler without rea- brought improper

merit and for two engendered dislike

sons: of Chandler cases,

other and a desire to make Chan- investigation

dler’s of her conduct client’s

more difficult. court concludes her

sanctions Keck and client are

necessary in mis- punish order to them for disqualification

use aof motion and deter

them from Ac- improper future conduct.

cordingly, the court will order that Keck jointly severally

and the Bank shall Chandler, pro

Kenneth O. se. * Submitted on the briefs: Thomas E. Jr., Counsel, Kemp, Oklahoma General ord, examining appellate unanimously * After the briefs and rec has determined Commission; alleged P. tax debt to the OTC is Joseph Gappa his Tax Action”). chargeable (“Dischargeability Willingham, Assistant General Amber L. Commission, that the his com- Counsel, day On Okla- issued the OTC. plaint, summons was Oklahoma, Defendant-Ap- City, homa ap- special response, OTC made pellant. case, bankruptcy in the Debtor’s pearance CLARK, ROBINSON, and Dischargeability Before the Ac- moving dismiss MATHESON, Judges. Bankruptcy jurisdiction. subject matter tion for lack of entity sovereign that a argued

The OTC Elev- immune from under the it was OPINION 106(a) Amendment, § and that enth CLARK, Judge. Bankruptcy sovereign im- abrogation a valid of its not that it munity. The OTC also maintained ex rel. The State of Oklahoma immunity in Debt- had not waived its (“OTC”) a appeals Commission case. or’s Bankruptcy the United decision of for the District of Okla- Northern bankruptcy court The denied homa, holding that the OTC could be sued Discharge- motion to dismiss the .OTC’s (“Debtor”) in the Chapter ability doing, In so the court is bankruptcy pursuant 11 U.S.C. a Opinion sued Memorandum and Order 523(a).1 holding, § In so 106(a) validly § holding abrogated 106(a) validly § abrogates ruled that immunity. sovereign OTC’s The OTC sovereign immunity. For the the OTC’s timely a from the appeal filed below, forth we REVERSE reasons set Opinion court’s final Memorandum and Or and REMAND. der, this party and no has elected appeal by the United States considered Background I. District Court for the Northern District 158(a)(1) § & Oklahoma. See U.S.C. allegedly The OTC assessed the Debtor 8001(a) (c)(1); 8002(a); taxes, R. Bankr.P. & certain filed tax warrant Fed. BAP L.R. tax 10th Cir. 8001-1.2 the Debtor related years later, the debt. Several Debtor Chapter under petition II. Discussion The as- Code. OTC In Straight Wyoming Dep’t it has neither filed a serts that (In Transp. Straight), re 248 B.R. in the participated nor claim otherwise (10th 2000), Court, split in a Cir. BAP this case, facts Debtor's these 106(a) decision, § con ruled that is not a are not contested the debtor. abrogation stitutional immunity. in the this complaint sovereign filed a unit’s Given decision, court, naming binding as a court’s OTC reversed,

defendant, be unless the Court seeking a determination must immunity, appealed parties’ request for a such as the order honor the decision case, argument. Fed. R. of 28 U.S.C. the briefs without oral See "final” 8012-1(a). 158(a)(1) Bankr.P. 10th Cir. BAP L.R. doc under the collateral order therefore submitted without oral Aqueduct trine. Rico Auth. v. Puerto & Sewer argument. 144-45, Eddy, & Metcalf ac 121 L.Ed.2d noted, statutory 1. all future Unless otherwise Elephant Irrig. Department cord Butte Dist. title 11 references herein are to Cir.1998), Interior, (10th States Code. rt. ce 1255, (1999); Straight v. 143 L.Ed.2d denying It is that an order well-established (In WyomingDep’t Transp. Straight), grounds to dismiss on the motion 2000). sovereign State is entitled its claim Cir. BAP immunity. States’ The Eleventh gate that the OTC is entitled determines solely immunity under the Elev- Amendment does exist or- sovereign claim Amendment, to “preven[t] judg- der federal-court enth or that paid of a immunity. ments that must out sovereign waived its As below, treasury,” Authority Hess v. Port proceeding cussed Corporation, 513 U.S. “suit” to which the Eleventh Trans-Hudson herein is a and, L.Ed.2d applies [115 245] based on the rec- us, (1994); it “the indig- has not also serves to avoid ord before the OTC waived Thus, nity subjecting immunity. bankrupt- State to coercive sovereign judicial in- process tribunals cy order must be reversed. court’s parties,” private stance of Puerto Rico is a 1. The Action Authority, Aqueduct and Sewer “Suit” Eleventh (internal U.S., 146, at 684] S.Ct. [113 Applies omitted). quotation marks sovereign immunity States’ is 58, 116 517 S.Ct. 1114. U.S. Amendment, derived the Eleventh from In bankruptcy, overwhelming power “The provides: Judicial is adversary proceeding that an view shall not be States construed a a names State as defendant sum any suit in or com equity, extend to law is mons court a suit federal prosecuted against menced or one of purposes, for Eleventh Amendment re State, by Citizens another gardless plaintiff is whether by Subjects any Foreign or or Citizens See, monetary e.g., relief from the State. XI (emphasis State.” U.S. Const. amend. Board, v. Mitchell Franchise Tax State of added). jurisdiction This bar to federal (In Mitchell), 1111, re 209 F.3d 1116 Calif. against States own extends to suits its (9th (In Cir.2000); Virginia v. Collins re See, Louisiana, v. e.g., citizens. Hans 134 Cir.1999), (4th Collins), 924, 173 F.3d 928-29 1, 504, 10, 10 U.S. S.Ct. 33 842 L.Ed. — denied, -, rt. U.S. 120 ce (1890); accord Seminole Tribe Florida 785, (2000); Mary 145 S.Ct. L.Ed.2d 663 44, 54, 1114, Florida, v. 517 U.S. 116 S.Ct. v. Liquidating land Antonelli Creditors’ (1996). 134 L.Ed.2d 252 The Eleventh Trust, 777, (4th Cir.1997); 786-87 express language Amendment’s makes (In Schlossberg re Maryland v. Creative only clear to a apply its limitations D.C., Inc.), Washington 119 Goldsmiths of “suit,” not all legal actions are suits (4th Cir.1997), 1140, cert. de F.3d 1148 for of the purposes afforded nied, 1075, 1517, 118 140 U.S. the Eleventh Amendment. (1998); University Virgi L.Ed.2d 670 (6 Wheat.) 264, Virginia, Cohens v. Robertson, 657, nia v. 243 B.R. 662-65 (1821). 407-12, 5 L.Ed. 257 (W.D.Va.2000); Taylor Georgia Dep’t v. suit (In It well-established that a 571, Taylor), Revenue re 249 B.R. 573- (Bankr.N.D.Ga.2000); Pitts v. Ohio any private (In action aby party Pitts), includes Dep’t Taxation re B.R. impose liabili (Bankr.N.D.Ohio 1999); a State seeks 862, A.H. 868-70 ty paid public which must be from funds of (In v. et al. Robins Co. James Dieleuterio See, treasury. e.g., Co.), (Bankr. Edelman re A.H. Robins 235 B.R. Jordan, 651, 1347, 39 NVR, LP, 94 S.Ct. E.D.Va.1999); see (1974). However, monetary (contested Cir.1999) L.Ed.2d 662 442, 452-53 necessarily a recovery against State where, although was a matter required an suit. action be deemed a reorganized appear, summoned to Tribe, In Seminole the Court stated: recovery from sought monetary — authorities), denied, sought cert. taxing of relief is irrelevant type [T]he -, Congress power 145 L.Ed.2d 815 to whether to abro- Walker, “jurisdiction over the debtor and guishing Texas juris- (5th Cir.1998), “bankruptcy his cert. estate” state”)); Antonelli, (holding that bank diction over the a suit the State was ruptcy case is not R. Bankr.P. F.3d at see also Fed. 7004(f) (“If into not hauled federal jurisdiction exercise of will, recognizing that the commence but with the Constitution laws consistent may adversary proceeding ment of States, serving of the United summons suit); Group, Healthcare In re Sun ... with this rule accordance (Bankr.D.Del.2000) 245 B.R. P .... subdivisions of Rule F.R. Civ. (same); Refining Corp., In re Barrett personal effective to establish (Bankr.W.D.Okla.1998) 801-08 any person over the defendant with Fiske, (same); Missouri v. see also respect or a to case under the Code civil 18, 28, 54 78 L.Ed. 145 Code, under or aris- proceeding arising (1933) (if voluntarily not come State does under ing in or related to court, may the federal court federal Code.”). appear). process compelling State to Action, In the n. Straight, 248 B.R. sought Debtor has determination of view, holding agreed with this dischargeability his debt to the proceeding adversary the in that case was adversary an The proceeding. record of the Eleventh the shows that Debtor named the OTC as Amendment. Action, Dischargeability in defendant the “adversary the rationale behind and in the OTC was summoned First, the proceeding” rule is twofold. such, bankruptcy the court. As the Dis adversary proceed- commencement of an is a which the chargeability Action suit to ing naming a State as a defendant results applies. Accord against in the the issuance of summons Mitchell, 1116; Straight, 209 at 248 F.3d thereby subjecting it the “indigni- State 4; Robertson, n. 243 B.R. at B.R. at 409 judicial in a ty” required appearance aof 664-65; Robins, 411; Pitts, 235 B.R. at Seminole, at tribunal. 517 116 241 B.R. at 868. Absent the OTC’s waiver 1114; R. see Fed. Bankr.P. 7001 & sovereign immunity, therefore, the its (c) 4(a), (b), (making Fed.R.Civ.P. and jurisdiction court lacks to con bankruptcy (j) applicable adversary proceedings); in Dischargeability sider the Antonelli, (commencement at 787 F.3d holding, note that had the so we adversary of an proceeding would “amount sought in the Action been judicial power to the exercise of federal ,as motion, brought by such a motion to against hale a state into federal court its order, clarify discharge or enforce a as in will and violation of the Eleventh 523(a) § adversary opposed proceed- NVR, Amendment.”), in 189 F.3d quoted may ing, the same not have ensued.3 result Second, at the commencement of an 453. Although squarely the before issue against a adversary proceeding State en- us, existing if a law indicates that mone- bankruptcy tails the exercise of m court’s State, tary recovery dispossession of assets the personam over sought from a in a proceeding in State are contested the resolution results and, matter, a suit does not exist there- specifically binding on decision Mitchell, fore, at See Eleventh Amendment does State. (distin- Collins, Walker, 821-24; at (relying apply. at 930 See F.3d on F.3d 2008(C)(5) (2000) (discharge § may 3. if the in bank- never arise Ann. bankruptcy nothing do plead were to in court ruptcy must be as affirmative de- an plead discharge Rankin, as affirmative defense fense); Co. Homeland Ins. 848 P.2d any by in the OTC to later state action (same). 1993) (Okla.Ct.App. alleged its lien. See 12 Okla. Stat. enforce Antonelli, Collins, 928-30; though, practical they for all purposes, F.3d at re- Crook, see also In re non-monetary sult the same relief as a Cir.), 541-42 cert. contested matter State. At 121 L.Ed.2d 430 however, time, given this the state bind- (1992).4 This limitation on the definition of law, ing no we see other choice than to necessary bankruptcy pre- a suit in embrace this anomalous result. undermining vent system, bankruptcy supported by and is 2. The Record in Does Appeal Not law related to the longstanding Indicate that Waived ability to enter courts’ orders fundamental Sovereign Immunity bankruptcy process, such may A its sovereign waive Yet, charge orders.5 as desirable as this case under may limitation the definition of a suit on 106(b)6 § or under be, principles common law recognize that we the current state of sovereign immunity. Straight, puts the law is undesirable form record, 106(b) § adversary proceedings over substance: 411-14. Based our State must dismissed al- waiver inapplicable because the OTC has Crook, 96, 102, was decided the Tenth Cir- L.Ed.2d 106(c), prior (discussing § cuit to Seminole Tribe and the amend- former the Court ments to 106 in held that it was offensive to Eleventh confirming plans orders courts be al- provisions writing down affecting contained un- lowed to make "determinations” mortgages units, dersecured held State of provided monetary re- State, Oklahoma. The which had not sought, covery "a State stated: proofs question, bound, in the of claim cases en- files no of claim would be like appearances special creditors, tered the cases to con- by discharge other of debts in bank- provisions. plan confirming test taxes, including ruptcy, unpaid but would not plans, rejected (cita- subjected monetary recovery.”) be sovereign argument, immunity holding omitted); generally tions see v. Congress’ bankruptcy power that Article I Co., 549, 545, Energy Res. 110 S.Ct. superior to the State's Eleventh Amend- 2139, (1990) (recognizing 109 L.Ed.2d sovereign immunity. ment The district court courts, “bankruptcy equity, that as courts affirmed, and the Tenth Circuit likewise af- authority modify have broad creditor-debt- firmed, holding sovereign immunity that did relationships.”); & State cf. California apply not was not because Research, Inc., Deep Lands Comm. v. Sea monetary Relying relief from the State. 491, 1464, L.Ed.2d 626 Dep’t v. Connecticut Income Main exception Hoffman (recognizing an in rem tenance, context (1989), L.Ed.2d 76 the Tenth Circuit held that law; admiralty federal court could deter injunctive declaratory and shipwreck, mine title to an abandoned even appropriate. State was 543. The holder, potential where a was a title that the issue court noted case at was not a possess did where the State vessel at "proceeding” against the State. Id. The Furthermore, issue). is well-settled ruling has Tenth Circuit’s in Crook been su- interpret power courts Tribe, perceded by yet it is Seminole notewor See, e.g., and enforce orders. In re Un their thy rationale that its does not conflict with ioil, Cir.1991) (citing today. our decision cases). long It been held courts 106(b) provides: 6.Section power to have the enter orders which affect part governmental proof filed a of their rem A unit that has States as the case to have over estates and to effect the fun of claim in is deemed Code, sovereign immunity respect waived with damental of the See, discharge. governmental e.g., Gardner a claim such unit that such as v. New 573-75, Jersey, property arose out estate and that (1947); People out L.Ed. 504 State New York of the same transaction or occurrence Co., Irving of which claim of such Trust unit L.Ed. 815 see also arose. Hoffman Maintenance, 106(b). Dep’t Income 11 U.S.C. Connecticut of claim in the Debtor’s filed a Furthermore, 7 case. common apply to the waiver law does There is

facts this case. provision waiving or constitutional

statute immunity, and this sovereign

the OTC’s or the involve the OTC’s

case does not participation pro- a federal

Debtor’s B.R. at 413. Straight, 248

gram.

III. Conclusion above, set forth

For reasons

bankruptcy court’s order is REVERSED. REMANDED to the

The matter is bank- dismissing

ruptcy court to enter

MATHESON, Bankruptcy Judge,

Concurring in Part. disposition

I concur in Court’s in this I decline to presented appeal. opinion of the

join portion dispose involving of an issue

purports to presented scenario neither

hypothetical argued by the appeal nor nor briefed disposition question

parties. The if might occur the Debtor elects to

what by way of motion rather than an

proceed

adversary proceeding should reserved day.

for another STRECKER, Shawn Debtor.

No. 00-13746-SBB. Court,

D. Colorado. 7, 2000.

June

Case Details

Case Name: Chandler v. Oklahoma Ex Rel. Oklahoma Tax Commission (In Re Chandler)

Court Name: Bankruptcy Appellate Panel of the Tenth Circuit

Date Published: Aug 24, 2000

Citation: 251 B.R. 872

Docket Number: BAP No. NO-00-016. Bankruptcy No. 99-01929. Adversary No. 99-0173

Court Abbreviation: 10th Cir. BAP