Straight v. Wyoming Department of Transportation (In Re Straight)

‘necessary plan’, fully exempt, thus and Beverly STRAIGHT, doing plans limitation In re A. support’

for for (a)(3) as re business Centerline Traffic Rog- would be eviscerated.” In ers, Flagging, & Control Debtor. 222 B.R. 351. Debtors are essen- tially seeking to extend the definition of Beverly Straight, doing A. business plans” retirement under subdivi- “private Traffic Centerline Control & (a)(1) to sion include roll-over IRAs. so Flagging, Plaintiff-Appellee, priori- doing, ignoring the Debtors are ty exemption legisla- established attempting ture and the “nec- eviscerate Department Wyoming Transpor- limitation, essary support” at least for tation, Defendant-Appellant. (a)(3).

rollover IRAs under subdivision attempt though to do Debtors this even County Lawyers’ York New of control the power acquired Debtors Association, Amicus upon equal rollover are to a traditional Curiae. IRA self-created account—albeit with lot BAP No. WY-99-020. money. This prepared more Court is not Bankruptcy No. 95-10007. It be grant request. up such will Adversary No. 96-1008. Legislature, the California should wish fully exempt quali- funds from ERISA Bankruptcy Appellate United States Panel subsequently private plans, fied retirement the Tenth Circuit. IRA, to an rolled over to enact clari- such May fying legislation order to protect evolving citizens in the ever employment

market.

CONCLUSION In conclusion and for set the reasons above, forth for the Court must find Objection Trustee. The roll- sustained. are exempt only over IRAs to the extent reasonably necessary per CCP 704.115(a)(3) (e). evidentiary An

hearing July will conducted on remaining to resolve the issues.

ORDER Therefore, it is

ORDERED, objection is sustained rollover are to the exempt IRAs reasonably extent necessary pursuant 704.115(a)(3) (e). §CCP Frankel, Angel & H. Gerson of

Leonard P.C., City, for Amicus Curiae. New York BOULDEN, PUSATERI, Before

ROBINSON, Bankruptcy Judges.

OPINION

PUSATERI, Bankruptcy Judge. of its

Asserting a violation Wyoming Department of immunity, (“the DOT”) moved to dis- Transportation filed adversary proceeding miss an (“Straight”), the by Beverley Straight A. Straight’s adversary Chapter 7 debtor. damages against seeks proceeding resulting the DOT’s violation of DOT from 525(a) 362(a) §§ when it U.S.C. “Disadvantaged Busi- Straight’s revoked (“DBE”) certification Enterprise” ness fil- solely Straight’s bankruptcy because of court ing. bankruptcy The denied grounds motion to dismiss on the DOT’s Dep’t Transp. rulings Wyoming (In Straight), 209 B.R. 540 Straight re that the sov- (D.Wyo.1997),holding DOT’s ereign immunity a related matter was waived validly abrogated under 106(b), Wyoming Dep’t under Straight), Straight re Transp. denied, Cir.), F.3d 1387 cert. (1998), holding court’s affirming the district sovereign immunity the DOT waived its * Gay Wood Submitted on briefs: 106(b), established the law the under General, house, Martin L. Hard- Attorney of law of the case. We find the doctrine General, Attorney and Jen Assistant socg, inapplicable to be under the facts of case Golden, Attorney Assistant nifer A. Senior case, an and conclude that General, Defen Cheyenne, Wyoming, for Wyo- attempt abrogate unconstitutional dant-Appellant. Straight’s ming’s sovereign Consequently, the adversary proceeding.1 & Stephen Winship Winship R. Win- re- P.C., bankruptcy court’s decision must be for Plaintiff- ship, Casper, Wyoming, versed. Appellee.

* 15, 1999, certify States Clerk of Court to to the United Court issued an On December honoring parties’ request a deci- question order for Attorney General the constitutional argument. on the without oral See sion Fed. R. Bankr.P. briefs U.S.C. The raised here about 11 8012; 10th Cir. BAP L.R. Attorney in this General has not intervened 8012-l(a). appeal. order, prior pursuant 28 U.S.C. 1. In a sponte directed the the Court sua

4Q7 Background, appeal the decision the United States Department Transportation. A. The and Fee Orders Contempt Straights filed “Motion for Order Straight highway operated flagging Citation,” to Show Contempt Cause and/or Traffic business known as “Centerline asserting that DOT’s decertification (“Centerline”). Flagging” Control DBE Centerline as a constituted a viola- was certified the DOT as a Centerline stay tion of the automatic under DBE. DBE certification entitled Center- prohibition and the against re- jobs subcontracting line to bid for on fed- voking Straight’s property rights based erally-funded highway projects state solely bankruptcy filing. her The bank- general obtain which contractors federal an ruptcy court issued order to show for DBE hiring incentives DBE’s. The cer- cause, scheduling hearing on the matter through tification is conducted August 1995. The DOT did not appear DOT, and the lets construction DOT also hearing, at the filed a response but written bids.2 motion and order that the court 13, 1995, January On and her day. later received filed a petition Chapter husband On September Code. The DOT re- court issued an order on the Straights’ Although ceived notice of the case. the (“the Order”), motion Contempt holding claim, proof DOT did file a of the the revoking that DOT’s stated reason for Wyoming Department Employment of and the DBE certification pretext, was mere Wyoming Safety the Compen- Workers’ & §§ that and the revocation violated (“the Entities”) sation Division State Other bankruptcy and The court ordered filed of claim proofs that totaled about DBE, DOT to the reinstate Centerline as a $30,000. Straights attorney’s awarded the fees and Shortly Straight after and her husband costs, and attorney ordered their to serve Chapter filed petition, their the DOT the DOT an of on itemization the fees and However, DBE. recertified Centerline as a incurred. Contempt costs The Order also later, a few weeks the DOT sent a letter the [Straights] “[S]hould stated: seek indicating decertify it intended to Center- fees, damages addition to their attorney a DBE Straight line as because had filed a they adversary proceeding must file an Chapter ability 13 case and the “lost R. accordance with Fed. Bankr.P. 7001.” business; control [her] that control now Straights’ attorney The an thereafter filed lies in the hands Bankruptcy Court itemization and it on The served the DOT. and the Trustee.” The letter itemization, DOT did not the object to and short gave period respond. Straight July the bankruptcy court that replied the legal premise for the an approving entered order fees and costs threat to decertify DOT’s Centerline was $1,949.94(“the Order”). of Fee incorrect, 1304(b) citing of the Bank- Code. ruptcy proceeded The DOT to de- B. Appeal the Fee Order of certify Centerline a DBE on as March 1995, claiming long- that Centerline was no the appealed DOT Fee Order to the er for DBE eligible status under 49 C.F.R. Court United States District for the Dis- 23.53(a)(2) Straight Wyoming, asserting because did not trict of of violation “possess the bonding sovereign immunity. financial and re- its That af- court firmed, necessary operate finding expressly sources business áb- rogated its field of work.” The notice of sovereign immunity for DOT’s Straight days §§ action added that had 180 Wyoming actions under 362 and 525. - U.S. -, description pro- 2. For further the DBE of 120 S.Ct. Constructors, Slater, gram, see.Adarand Inc. (2000). (In Straight sovereign re nor has the State waived its Transp. v.

Dep’t of (D.Wyo.1997) 209 B.R. 540 Straight), immunity under the 11th Amendment to I”). analysis In (“Straight light of its of the United States Constitution.” Florida, Tribe v. 517 U.S. Seminole request, bankruptcy At the DOT’s (1996), 1114, 134 L.Ed.2d postponed ruling on the motion to court constitution- ruled that was court appeal while dismiss the Fee Order Alternatively, al. Id. 546-555. After pending. Straight the decision sovereign immu- held that the court DOT’s II, however, the court bankruptcy entered 106(b) had been waived under when nity denying an order the DOT’s motion. proofs Entities filed of Other order, court held Id. at 555-58. claim. I Straight the decisions in order was affirmed The district court’s Straight disposed II the DOT’s claim Appeals United by States Court sovereign immunity, stating: “[T]he Wyoming Dep’t the Tenth Circuit. effectively matter has been resolved Straight), re Transp. v. May the District Court’s order of (10th Cir.) II”), (“Straight cert. F.3d 1387 case, which underlying bankruptcy denied, was affirmed the Tenth Circuit Court The Tenth Circuit Appeals.” timely appealed, constitutionality The DOT to address the refused case, application bringing dispute to the but to us. ground that affirmed on the DOT’s waived un- had been Straight’s Chapter D. Conversion IS 106(b) filing §der result case to Chapter claim, proofs State Entities’ Other 106(b) Id. the filing About three months after constitutional. Suit, Damages bankruptcy

1389-92. the the court Straight’s entered orders that bifurcated Damages C. Suit case, from her case husband’s dismissed case, appeal the Fee Order was her husband’s converted her While the and case with the bank- pending, compliance and Chapter to one under 7. No Chapter Contempt court’s directive the ruptcy reorganization plan of for either of the Order, Straights adversary filed an the Straights ever confirmed. (“the Dam- proceeding against the DOT the bankruptcy Neither court’s order Suit”). it, they sought compensa- In ages the denying DOT’s motion dismiss the attorney’s tory punitive damages, plus and Damages Suit filed in nor the briefs this costs, Straight fees and based on contracts appeal addressed the conversion of claims she lost because the DOT revoked Straight’s Chapter case from 13 Chap- certificate, DBE contracts would the ter or the effect of that conversion on allegedly produced profits have net over the issue of waiver of the DOT’s sover- $250,000. Straight’s At point, some hus- 106(b). immunity In eign supple- under band was dismissed from the suit. The Court, briefing by this required mental the com- DOT filed a motion to dismiss however, that, Straight pursuant admits has plaint, declaring that “this Court no 348(f)(1), the claim she asserts jurisdiction proceed against the [DOT] is no Damages longer and the DOT Suit grounds on the for the reason the [Straights] State is not a creditor of the estate.3 requiring supplemental Court brief. The 3. The entered an order filed DOT has brief, parties supplemental addressing supplemental to strike to file moved and briefs Straight's objection the effect of the case. the amicus curiae filed an to the conversion has Lawyers’ response, County motion The motion to New York DOT’s to strike. strike Association, appeal, an curiae in this is denied. amicus 1996). Appellate II. Jurisdiction The bankruptcy court’s order re fusing Damages to dismiss the Suit based parties, the consent With preclusive Straight effect I and jurisdiction to hear timely-filed has Court See, Straight II is reviewed novo. e.g., de orders, judgments, from “final appeals (In Gledhill), State Bank Gledhill re bankruptcy courts within the decrees” 1070, 1082(10th Cir.1996) F.3d (applicabili 158(a)(1), Tenth Circuit. 28 U.S.C. ty preclusive doctrines reviewed de (b)(1), (c)(1); Fed. R. Bankr.P. novo); Lacey, United States v. 982 F.2d appeal is before us. The properly This (10th Cir.1992) (preclusive effect timely appeal filed a notice of DOT order, novo); par- prior judgment de bankruptcy court’s and the reviewed see II, Straight hearing ties have consented this Court also (apply F.3d appeal by failing to elect to have sovereign de novo review to immunity 158(c); court. Id. heard district holding). 8001; R. 10th BAP

Fed. Bankr.P. Cir. order, prior L.R. 8001-1. In a this Court IV.Discussion appealed final determined order is a Contrary to the bankruptcy court’s rul- under order the collateral order doctrine.

ing, we conclude that Straight neither I III. Standard Review nor II establishes law of the Suit, the Damages case for and therefore purposes “For of standard of re they binding are not on the issues of waiv- view, by judges traditionally decisions are er constitutionality or the categories, divided into three denominated The DOT has not its sovereign waived (reviewable novo), questions law de immunity Damages Suit (reviewable questions of fact for er clear 106(b) Furthermore, (reviewable common law. ror), and matters of discretion discretion’).” because is an unconstitutional at- ‘abuse of Pierce Un derwood, tempt abrogate sovereign the DOT’S (1988); Suit,4 Damages from the see R. Fed. 8013; Bankr.P. Fowler Bros. v. court’s Young refusing order to dis- Young), Damages re Cir. miss the Suit is reversed. (or dischargeability

4. The States' "Eleventh Amend- lien avoidance actions to ment”) "suit”); immunity protects Refining Corp., them from a "suit.” be a In re Barrett 221 795, (Bankr.W.D.Okla.1998) Recent case law that are B.R. 801-08 indicates courts struggling (bankruptcy cases are "suits” bankruptcy "suit” a not covered define in Amendment). sovereign Eleventh immunity context when is issue. (In Collins), Virginia See v. re F.3d Collins 173 bankruptcy Straight The ruled that if court — (4th denied, U.S. -, Cir.1999), 924 cert. DOT, monetary damages from wanted the an 785, (find- 120 adversary proceeding necessary be would un- reopen ing that a motion to and determine der R. We Fed. Bankr.P. 7001. conclude that discharged a debt "suit” that was was not a Damages the accord Suit—filed in with the against implicated a state that the Eleventh instruction, bankruptcy naming court’s the Amendment); Maryland v. Antonelli Creditors' defendant, serving a DOT as with Trust, (4th Cir.1997) Liquidating F.3d 777 123 summoning appear bankrupt- it to the before (a "suit” confirmation order was not a court, cy recovery seeking money and the of state); University the Va. v. Robert asking an the from it—is “action court to take of son, 657, (W.D.Va.2000) 243 B.R. 662-65 away presently posses- asset the an in state's (concluding adversary proceeding sion,” that an implicates and Eleventh Amend- the dischargeability Robertson, determine the a (when student 243 at 662-65 ment. B.R. a asks, contemplated by was a the loan "suit” as adversary proceed- debtor motion or Amendment); Eleventh accord Ohio dispossess Pitts v. ing, a that federal court a State of Pitts), Dep’t re Taxation 241 B.R. presently possession, an asset in its or when (Bankr.N.D.Ohio 1999) (applying adversary proceeding pre- 869-70 a an a court to asks receiving possession six-factor test to if the determine substance vent the State from of an underlying possession, the constituted a the the action "suit” asset in estate's Eleventh purposes, finding applies). Eleventh Amendment and Amendment 410 distinct”), “factually if ply doctrine earlier matter is The law the case A. other on grounds rehearing on modified Circuit, law the In Tenth banc, (10th Cir.1994), 39 F.3d en 1078 cert. as follows: case doctrine is defined denied, 115 131 appeal decided on become law Issues (1995). particularly is This case and to be followed all are a bankruptcy, may true where “case” in the subsequent proceedings same a adversary pro involve series of distinct a in the trial court or on later case matters, ceedings or contested each involv court, “unless the appeal appellate facts, a similar set of but different trial was sub- subsequent evidence on based on evidence. claims different different, controlling authority stantially contrary made decision has since I Straight Straight B. II issues, or the applicable the law to such analysis An application law clearly erroneous and decision requires the case in this case doctrine injustice.” would work manifest holdings Straight we review I that (In Woods), v. Kenan re 215 B.R. Woods I, II. Straight Straight the DOT (10th 1998) (quoting Cir. BAP immunity argued sovereign barred Murtha, 428, 431-32 377 F.2d White Fee Order. court’s (5th (5th Cir.), denied, reh’g F.2d 34 contention, court rejected this district (10th Cir.1967)), Cir.), aff'd, 173 F.3d 770 holding abrogated the DOT’s — denied, U.S. -, cert. sovereign immunity, and was constitutional 145 L.Ed.2d The doctrine does I, Straight Seminole under Tribe. apply appellate not “‘unless an decision Alternatively, B.R. at 546-55. the district of the claim has issued the merits court held the Other Entities’ ” precluded.’ Mitchell v. sought of claim a waiver of proofs served as (10th Cir.

Maynard, 80 F.3d 106(b). immunity DOT’s 1996) County v. Board (quoting Wilmer at 555-58. Id. (10th Comm’rs, Cir. II, 143 F.3d at affirmed Resources, 1995)); Octagon Inc. accord 106(b) ruling only, the district court’s (In re Corp. Bonnett Resources Meridian constitutionality concluding Inc.), Reserve, F.3d Cir. need not be addressed because 1996). therefore, decision, An earlier will the DOT’s had been waived un- apply not later matter related liti 106(b).5 determine der To whether claim, premised later gation although 106(b) applies, Tenth Circuit said facts, based on different evi on similar following questions be answered: must See, e.g., Meridian dence admissions. Reserve, (doctrine 1) F.3d at 410 does What is a unit” “governmental Wyoming apply previous ruling where was made in does fit that definition context, 2) so, case; con asserted involving different different has the Debtor a siderations); against Wyoming “property Metal claim that is Guidry v. Sheet Work Ass’n, estate”; 3) ers Int’l Local No. 10 F.3d of the did that claim arise (10th Cir.1993) (doctrine not “from the transaction or occur- ap- does same 106(b) 106(b). § have 5. Section states: 11 U.S.C. Some courts held 106(b) that is under unconstitutional Semi proof governmental a A unit that has filed See, Schlossberg Maryland e.g., Tribe. nole Comptroller of claim in the deemed to case is have Treasmy re the Creative of sovereign immunity respect waived with to D.C., Inc.), Washington, Goldsmiths of against governmental a claim unit that such Cir.1997), denied, F.3d cert. property of the and that arose out estate 140 L.Ed.2d II, of the same occurrence transaction or out Straight In at 143 F.3d however, governmental 106(b) of which the claim of such the held that Tenth Circuit unit arose. is constitutional.

All previously prompted Straight renee” the of claim a proofs contempt as to seek or- by filed the State? at against der the DOT. Id. 1391. Since both the of claim the proofs contempt Answering questions, at 1390. these Id. business, allegations Straight’s arose from that a the Circuit first held the DOT was the Tenth Circuit that concluded the re- unit” as that term is de- “governmental spective claims arose from the same trans- 101(27). II, Straight §in fined action or occurrence. Id. at 1390-91. The and the DOT Other State Entities, units,” “governmental also were parts all of Wyoming, the State which Straight II C. is not the law the case regarded bankruptcy be one

should Damages Suit Therefore, entity. unified Id. the Other Applying the law of the case doc of claim to proofs 'applied State Entities’ 106(b) trine to issues waiver under of Wyoming’s agencies purposes all for we appeal, Straight this conclude that II is 106(b). Id. binding not the Suit. Damages Unlike Tenth also the Circuit held that claim Straight’s against the DOT Straight asserting against claim was the II, Straight the claim Straight asserted estate,” “property stating: DOT was the not, Damages parties’ the Suit is the That leads us consideration of law, applicable “property admissions Straight whether Ms. has asserted 106(b) estate.” This element claim against Wyoming property that is met, we being need not address wheth Although of the estate. one ex- might II er is the Straight law of case on the that pect claims of nature nor- are other elements of two the test Tenth mally damages, for money the action 106(b). applied Circuit under recovery before us at this time seeks a is not fil- essentially monetary. that 106(b) requires Section that a debt- ing her motion show cause and against or’s governmental claim unit be contempt, Straight initially Ms. ... “property estate” as term is sought the restoration the certificate in the Bankruptcy defined Code. 11 U.S.C. prior bankruptcy she owned that was 106(b); II, Straight 1390-91. F.3d essential to postpeti- the conduct her II held Straight’s claim certificate, tion business. Without against the DOT in the Order appeal Fee she could not conduct her as a affairs was estate contractor, flagging nor could she effect 541(a)(1) seeking because she was “res believe, Chapter plan. We there- prior toration of certificate she owned fore, can no there doubt that in this that was essential quest the Debtor was in every sense conduct her postpetition business.” Id. seeking the return of property of attorney at 1391. The modest fees at is concept estate as that is broadly defined only sue were incidental the claim in 541(a)(1). in U.S.C. appeal, Straight II Fee Order which deter added). at 1391 (emphasis Id. essentially monetary.” mined “not Id. Finally, answering question, third It elaborated that “[without certifi cate, Circuit [Straight] concluded that the claim as- could not her conduct af contractor, DOT flagging serted arose from the fairs as a nor could Chapter “same transaction plan.” or occurrence” as she effect Id. Based proofs of Id. premise, Other Entities’ claim. on this the Tenth Circuit held at 1391-92. The Circuit held that those that “there can be no doubt that in this claim, proofs [Straight] every of which re- in quest asserted claims was sense seek Centerline, to Straight’s ing lated of of the operation property the return of estate as concept were linked to the DOT’s of that defined in 11 broadly decertification is DBE, 541(a)(1).” § Centerline as a which what was U.S.C. Id.

412 II, therefore, Straight in in is not the DOT the Order bind- against claim

Straight’s cause postpetition Damages is a of of the in the Suit. Damages Suit as law case action, on seeking based con- damages (1) Straight were that asserts: ob- tracts inapplicable D. law waiver is Common (2) postpetition; her business tained Damages in the Suit produced profits net of over have

would 106(b) (3) § apply held to the $250,000; Since was and were lost because the 525(a). court appeal, §§ The Fee Order the district violated DOT against required agree Straight’s that claim the Tenth Circuit not parties were is not Damages prop- the in the Suit I or II to address wheth- Straight Straight DOT Straight’s erty Chapter of the 7 estate. had im- er the DOT waived expressed Supplemental in her position, under rules of munity common law waiver. Brief, any recovery she receives in 106(b) is Damages in the apply As does not not of the Damages property the Suit is Suit, must we examine whether common estate, hers but is alone. analysis to an applies, prior law waiver of See, whether is constitutional. by appli-

Straight’s position supported is e.g., Broadcasting New Orleans Greater express of the Bank- cation of the terms States, 173, 184, v. United 527 U.S. Ass’n against ruptcy Code. While her claim the (1999) 119 S.Ct. property could be viewed as the DOT (“[W]e ordinarily do not reach out make 1306(a),6 under that section no estate pronounce- unnecessarily novel or broad Straight’s Chapter longer applies because Chapter ments on constitutional issues when 13 has been converted to 7. case case 348(f)(1), Straight’s fully can on a Pursuant when resolved narrower Jones, Chapter ground.”); was converted to the Clinton v. 520 U.S. case (1997) property 690, 117 7 of the Chapter estate consisted 137 L.Ed.2d possession (“ in her or control still Tf there is more deeply one doctrine the date property of estate as of she than rooted other bankruptcy.7 filed for Since the originally adjudication, constitutional it is we Damages claim asserted Suit did not pass not to of constitu- ought questions on date, it on the is petition even exist not tionality adjudication ... unless such is ” property Chapter estate. Army (quoting unavoidable.’ Rescue Court, 570 n. Municipal (1) parties agree Because (1947); L.Ed. 1666 fur- claim the DOT Straight’s omitted)); quotations ther internal Zobrest estate, is of the Damages property Suit Dist., (2) Catalina Foothills School agreement this consistent with is (1993) 1, 7, 348(f), 125 L.Ed.2d plain language case is (courts constitutionality should not factually distinguishable pass II. 106(b) to the of Act of if constitutional issue application Fee estate, case, filing peti- Chapter "property as of In a es- the date of tion, property includes "that the debtor ac- possession tate” that remains in the or quires after the commencement case is under the of the debtor on the control dismissed, closed, but before case is date of conversion.... chapter to a converted case under 348(f)(1)(A). Paragraph 11 U.S.C. title, of this whichever occurs first.” 348(f) exception, stating creates bad faith U.S.C. Chapter under that if debtor converts a case Chapter to a case a different in bad under 348(f)(1)(A)provides: 7. Section faith, property case in the converted shall (f)(1) (2), Except paragraph provided as of consist of the of the estate chapter title when a case under 13 of this allega- no date of conversion. There has been chapter to a converted case under another Straight’s tion that was converted in bad case this title—(cid:127) faith. (A) property the estate in the convert- property of ed case shall consist

413 eases)). 666, 119 2219, 2226, 144 (citing For can avoided the U.S. S.Ct. L.Ed.2d be below, (1999) forth that the (“College Savings”); reasons set we hold 605 United Inc., sovereign immunity 30, has not been Village, DOT’s v. States Nordic 503 U.S. law 1011, waived under common rules of waiver. 112 117 181 S.Ct. L.Ed.2d (1992). “The test for determining whether Supreme The Court indicated has immunity a State has waived its from fed- “A State may that: effectuate waiver of jurisdiction eral-court one.” stringent immunity by a stat its constitutional state Atascadero, 241, 473 at U.S. 105 S.Ct. by other provision, ute or constitutional “A 3142. waiver Eleventh Amendment in waiving immunity wise suit immunity ‘only will be found where stated a particular program.” context of federal by expressive by language most Scanlon, Hosp. v. Atascadero State 478 overwhelming implication such 234, 3142, 1, U.S. 238 n. 105 S.Ct. 87 leave for text no room other [will] (1985), quoted 171 L.Ed.2d in Innes v. ” Innes, reasonable construction.’ 184 Innes), Kansas State Univ. re 184 Jordan, F.3d at v. (quoting 1278 Edelman 1275, Cir.1999), F.3d 1278 cert. de 1347, 415 U.S. 94 S.Ct. 39 —nied, -, 1530, 120 U.S. S.Ct. 146 (1974) (internal L.Ed.2d 662 quotation 345 The L.Ed.2d Tenth Circuit’s omitted)). Even a State’s constitution or application recent of common law waiver of courts, immunity statute in its own waives immunity compels in such waiver is insufficient to waive its inquiry an into the doctrine’s applicability immunity College in federal court. Sav- in present appeal, underly- where the ings, 2226; Atascadero, 119 at 473 S.Ct. implicate a federal program. events 241, 3142; Innes, U.S. at 184 (without Innes, See at 184 F.3d 1278-81 Furthermore, sovereign’s F.3d at 1279. 106(b), mentioning Tenth Circuit held consent to be sued “‘must be construed in immunity discharge- Kansas waived ” strictly in Nor- sovereign.’ favor ability by participating action in federal Village, 503 at 112 1011 dic U.S. S.Ct. program mandating compliance bank- with States, (quoting McMahon v. United 342 laws); ruptcy Jersey, v. Gardner New 329 25, 27, 72 96 26 U.S. S.Ct. L.Ed. 67 L.Ed. U.S. (1951)). (1947) (bankruptcy may ob- court entertain jections proof despite to State’s of claim in Wyoming has not waived its sovereign immunity); assertion of Rose v. by provision federal actions constitutional (In Rose), United Educ. re Dep’t States Wyoming The or statute. Constitution (8th Cir.1999) (relying F.3d may brought provides “[s]uits be common law set forth in Gardner principle against in the state in such manner and in bank- proof submission claim legislature may by such courts as the law immunity); ruptcy Georgia Dep’t waives Wyo. Wyo. direct.” Const. art. (In Burke), re Revenue Burke 146 F.3d ac Ann. 1-35-101 declares that Stat. — (11th Cir.1998), denied, cert. may only main tions be -, tained in courts. See Williams v. state Gardner, 106(b)). (applying (10th Cir.1971) (im Eaton, 443 F.2d

Common law waiver is narrow munity in Wyoming only is waived in scope. unequivocal courts). It an “require[s] courts, not federal actions state indication to consent State intends jurisdiction that

to federal otherwise would DOT also has not waived its immunity by pro the Eleventh Amendment.” the DBE participating barred Atascadero, administered, which is gram, part, Innes, 1278; Secretary Transpor quoted the United States regulations imple College Prepaid see Sav. Bank Florida tation. The federal Bd., Postsecondary Expense DBE no re- menting program way Educ. 414 106(a). court deter- participating waiver of a State’s

quire a by 49 that it was the district immunity. See C.F.R. subtit. mined bound sovereign I, held, A, 23, Straight F in which While court’s decision pt. subpt. Innes, part, in 184 F.3d at in that constitutional. Circuit held is See Tenth I, in a B.R. We participation Straight that a 209 at 546-55. con- State’s I requires Straight binding that is not that adherence clude program federal Damages effect a law the case in the Suit. bankruptcy law is sufficient to to immunity, sovereign applica- waiver above, the As discussed law of case, regulations in this unlike ble federal requires the case doctrine “when a Innes,8 bankrupt- in do not mention those law, upon court decides a rule of A, 23, pt. subpt. subtit. cy. See 49 C.F.R. govern should continue to decision F. stages in subsequent same issues in the Finally, although some courts California, v. 460 same case.” Arizona participation that a active have held State’s 1382, 103 75 U.S. L.Ed.2d proof its of a claim filing in a case or (1983), quoted Stifel, 318 in Nicolaus & immunity as to all mat waives the State’s 1540, Co., Woolsey Co. & F.3d v. 81 1543 case,9 this adopt we do ters (10th Cir.1996). practice pro rule of “This 106(b) it would render position because finality efficiency motes the useless, Supreme run to the counter judicial ‘protecting strictly construing ” Court’s insistence agitation of settled issues.’ Christianson immunity. sovereign See Nor waivers Operating Corp., Indus. 486 Colt U.S. 34, 112 Village, dic 503 U.S. at S.Ct. 1011. 800, 816, 108 100 v. Murdock Mach. See also United States Moore, Lucas, IB (quoting J. J. & (10th Cir.1996) Co., 81 F.3d 922 Eng’g & Currier, T. Moore’s Federal Practice (under Act, con which did not ¶ (1984)). 0.404[1], blush, at 118 At first sovereign immunity provi tain waiver apply would in appear doctrine this §to was similar United States sion case the district court’s constitutional related to automatic immune suit analysis of claim; stay proof fact it had filed despite filing proof makes clear that of claim court exceptions Certain the law not waive of United States did doctrine, however, prevent of the case general). First, application the law of case. apply case doctrine does not dictum. ruling E. The constitutional Reserve, 410; Meridian 87 F.3d 18 J. Straight I not law the case Moore, Moore’s Federal Practice (3d 106(b) ed.1999) n. 3 Having (citing found waiver and com- & sev 134.21[2] cases) Dam- eral In inapplicable [hereafter “Moore’s”]. mon law waiver II, Suit, squarely Straight effectively with the the Tenth ages we are faced Circuit im- ruling of whether the DOT’s ruled that constitutional issue dictum, validly I munity abrogated has been because matter Innes, See, e.g., Fennelly, B.R. participation a federal 9. In re In Kansas’s (D.N.J.1997) (regardless §of state con- program required perform loan student by filing tó be sued court sents in federal certain actions in the event a borrower claim); proof accord Ossen Connecticut bankruptcy, including staying filed its collec- Charter Dep't socs.), Soc. Servs. re Oaks As filing tion of a debt in accordance with (Bankr.D.Conn.1996); 203 B.R. claim, and, proof if the debtor filed (In Burke), Georgia Burke v. re B.R. hardship discharge complaint seeking a (Bankr.S.D.Ga. 1996), aff'd, 146 F.3d 523(a)(8), investigating claim debtor's - denied, (11th Cir.1998), cert. defending against complaint appro- -, (1999); 144 L.Ed.2d Innes, priate. at 1282. Refining Corp. 221 B.R. re Barrett (Bankr.W.D.Okla.1998). 106(b). Tribe, decided under properly was See nole the Court has made clear that II, 143 F.3d at Congress only 1389 and 1392. has authority limited to ab- Second, the law of the case rogate doctrine is also immunity by States’ statutes 106(a). inapplicable if there change Tribe; has been similar to See Seminole law, Alden; statutory change either due to a College Savings; Prepaid; Florida Moore’s, or a higher decision court. Kimel. 134.21[3]; Stifel, 81 F.3d at 1544. Since 106(a) The DOT asserts that is not a decided, Straight I Supreme Court abrogation valid of Wyoming’s sovereign has handed down five cases that establish 106(a) immunity. provides Section in part: that the district court’s constitutional anal- Notwithstanding an assertion of sov- ysis was incorrect. Kimel v. Florida Bd. ereign immunity, sovereign immunity is — U.S. -, 631, Regents, 120 S.Ct. abrogated governmental as to a unit to (2000); 145 L.Ed.2d 522 Prepaid Florida the extent set forth in this section with Postsecondary Expense Educ. Bd. v. Col- respect to the following: Bank, 627, lege Sav. 527 U.S. 119 S.Ct. (1) 105, 106, 107, 108, 303, Sections 2199, (1999) (“Florida 144 L.Ed.2d 575 346, 362, 363, 364, 365, 366, 502, 503, ”); Prepaid College Savings, 527 U.S. 505, 506, 510, 522, 523, 524, 525, 542, 2219; Maine, 119 S.Ct. Alden v. 527 U.S. 543, 544, 545, 546, 547, 548, 549, 550, 119 S.Ct. 144 L.Ed.2d 636 551, 552, 553, 722, 724, 726, 728, 744, (1999); Flores, City Boerne v. 521 U.S. 749, 764, 901, 922, 926, 928, 929, 944, 507, 117 2157, 138 L.Ed.2d 624 1107, 1141, 1142, 1143, 1146, 1201, (addressing Congress’ power to enforce 1203, 1205, 1206, 1227, 1231, 1301, Amendment, Fourteenth but not States’ 1303,1305, and 1327 of this title. sovereign immunity). Because these ex- The four succeeding subsections ceptions to the law of the case doctrine 106(a) further aspects define various apply, Straight I binding, is not and we abrogation. this example, For subsection

must examine the constitutionality of (3) specifies money that recoveries are au- de novo. thorized but punitive damages are Suit, In Damages not. Straight asked F. The constitutionality §of for punitive damages, so provision Maine, In Alden v. 527 U.S. bars that aspect of her claim. 2240, 2246-47, 119 S.Ct. 144 L.Ed.2d 636 parameters of a abrogation valid (1999), Supreme explained Court sovereign immunity are limited. Accord- although it had sometimes referred to the Tribe, ing to Seminole attempt- statute sovereign States’ immunity as “Eleventh abrogate the States’ im- immunity,” Amendment immunity ac munity pass will only constitutional muster tually does not derive from that Amend answered, questions two can be “Yes”: Instead, ment. it is a aspect fundamental “first, Congress whether ‘unequivocal- has immunity of the enjoyed the States before ly expressed] abrogate its intent Constitution, the ratification of the Mansour, immunity,’ Green 474 U.S. includes all that immunity except to the (1985); 106 S.Ct. extent the required States were to surren second, whether has acted der part it as design constitutional ‘pursuant to a valid power,’ exercise of subsequent Amendments (al- ibid.” 517 116 S.Ct. 1114 Constitution. Except for the waiver-by- original). teration in filing-proof-of-claim theories we have re 1. Section is an unequivocal above, jected no claim is made here that expression abrogate intent to Wyoming’s immunity Damages from the sovereign immunity States’ Suit has been affected in way except Congress’ enactment of clearly Section “un- meets the series of beginning decisions equivocal with Semi- abrogate” intent to It pro- test. immunity unconsenting States abrogat- “sovereign

vides by private parties federal courts. suits unit ... with governmental to a ed as 1114. The 517 U.S. sixty sections to” a list respect Pennsylva- decision of Court overruled the Code, court “[t]he Co., 1, 19-20, nia v. Union Gas arising any issue may hear and determine (1989), which application of such respect to the with In- pursuant to the upheld abrogation had governmental units.” sections Id. at terstate Commerce Clause. 106(a)(1) (2). § It autho- & also U.S.C. then, the Court has 109 S.Ct. 2273. Since court to “issue the rizes that Tribe means declared Seminole order, pro- unit an governmental a I Congress’ powers of under article none ..., cess, judgment under such sections attempt an support of the Constitution will a judgment awarding including an order sovereign immuni- abrogate the States’ 106(a)(3). § The money recovery.” Id. Maine, 706, -, Alden v. 527 U.S. ty. unit” means “State” “governmental term 2240, 2246, 144 119 S.Ct. or instrumen- “department, agency, at -, (1999); Prepaid, Florida 527 U.S. 101(27). § ... a Id. tality of State.” decisions, it 119 at 2205. After these S.Ct. 106(a), Thus, Congress § has made its Congress’ power article I “To is clear sovereign abrogate intention to the States’ subject ... the uniform Laws on establish “ ‘unmistakably clear in the lan- Bankruptcies throughout of the United ” Seminole, of the statute.’ 517 guage include the to ab- power States” does not 56, (quoting at 116 1114 Dell U.S. S.Ct. immunity. sovereign the rogate States’ Muth, v. 491 U.S. 109 S.Ct. muth Const, I, 8,§ 4. art. cl. U.S. (1989)); 2397, see also 106(a) whole, § 8. Considered as Pennsylvania Dep’t v. Hosp. Heart Sacred pursuant not enacted to a valid exer- (In Heart Pub. re Sacred of Welfare power cise under 5 the Four- of (in (3d Cir.1998) 237, 243 Hosp.), 133 F.3d teenth Amendment the Constitu- Congress unequivocally enacting tion abrogate the States’ expressed its intent may Congress abrogate immunity); accord Eleventh Amendment immunity under 5 of States’ Schlossberg Maryland Comptroller v. Kimel, 120 the Fourteenth Amendment. (In Treasury re Creative Goldsmiths Alden, 2267; 644; at at S.Ct. S.Ct. Inc.), D.C., 1140, Washington, F.3d 2223; Savings, Flori College 119 S.Ct. (4th denied, Cir.1997), cert. 523 U.S. 2205; Prepaid, 119 Seminole da 1517, 140 L.Ed.2d 670 Tribe, 1114. This 517 U.S. at it dispute does not DOT provision Congress “to enforce” empowers 106(a) “governmental unit” to which “appropriate legislation” guaran with 106(a) §if was en- applies. Consequently, §in Fourteenth set forth tees pow- acted to a valid exercise of pursuant namely, that “No State shall Amendment: er, validly the DOT’S sover- abrogates any make or enforce law which shall eign immunity. or immunities of abridge privileges pursu- 2. Section was not enacted States; any nor shall citizens of the United power ant a valid exercise if life, liberty, or deprive any person of I, § premised on art. the Consti- law; without due nor property, tution jurisdiction deny any person within Tribe, Supreme Court equal protection Seminole of the laws.”10 We consider, therefore, Congress pow- ruled that not use its Con could next whether Clause, pursuant er under the Indian Commerce enacted gress properly Const, I, that Amendment. abrogate power cl. to its to enforce U.S. art. Const, protects right vote. power See has a similar XV, XIII, Amendment, 2. The 2 & amend. Thirteenth which abolished slav- amend. secure, however, Amendment, they rights have little ery, and which the Fifteenth

4J7 found, So far as we have all the rately Circuit for each sixty court considering question decisions provisions Code listed in it. Such a sepa- since Seminole Tribe was decided have analysis rate provisions the Code refer- ruled that interpreted cannot be §in enced would honor the maxim to have resulted from an exercise of Con of statutory construction that allows for an gress’ power to enforce the Fourteenth unconstitutional provision to be severed in Amendment. Hosp. See Sacred Heart v. order to save the balance of the statute. (In Pennsylvania Dep’t Pub. re Welfare Valeo, In Buckley Heart Hosp.), Sacred 133 F.3d 243-44 46 L.Ed.2d (per cu- (3d Cir.1998); Department Transp. & riam), the Court noted the standard for Dev. v. PNL Management Asset Co. LLC determining severability of an uncon- Fernandez), re “ provision: stitutional ‘Unless it is evident Cir.1997), point, amended on different legislature would not have enacted 1138; F.3d Schlossberg Maryland provisions those which are within pow- its Comptroller the Treasury re Crea of er, independently not, of that which is the D.C., tive Washington, Goldsmiths of part may invalid Cir.1997), if what dropped is left Inc.), 1146-47 is fully operative as a law.’” (quoting denied, 1075, 118 rt. S.Ct. ce Champlin Refining Corporation Co. v. L.Ed.2d 670 agree We Comm’n, with these courts that the full reach U.S. 52 S.Ct. 106(a) cannot be (1932)). considered to have 76 L.Ed. 1062 It should be noted preventing

been aimed at the States from that Congress indicated its intent that un- violating the Fourteenth Amendment. provisions constitutional be severed when For example, many of provisions the it included a severability provision in the 106(a) applicable makes to the States Bankruptcy Reform Act of the Act only, concern mainly, or at least types of amended 106 into its present relief made available to a trustee or debt- form.11 or-in-possession in a bankruptcy case with out regard any action might have Yet taking even the approach of consid- (These by been taken a State. include ering abrogation of the States’ immuni- use, sale, § 363 on the of proper lease ty only specific connection with the pro- ty, § obtaining credit, 364 on postpetition visions the debtor contends were violated and 365 on executory contracts and case, 525(a), §§ in this and we can- leases.) unexpired provision Another list not agree Congress authority had the 106(a), 547, ed in would authorize the under the Fourteenth Amendment to sub- recovery preferences States, from the ject unconsenting private parties’ States to and preferences require absolutely no suits based on those provisions. Recent wrongdoing by parties from whom Supreme Court decisions make that view they may be recovered. untenable. Even only considered in connection A §§ Tribe,

with Since Seminole Supreme pursuant was not enacted to a valid Court has decided a number of cases con power exercise cerning Congress’ power to enforce the Fourteenth Amendment the Consti- first, Fourteenth Amendment. In City tution Flores, 521 of Boerne (1997), The dissent suggests that the va a church lidity of alleged must be evaluated sepa- religiously-neutral that a state law impact 103-394, bankruptcy, §§ could not even 11. See Pub.L. No. 701 & 113 arguably support (Oct. sovereign immunity 1994), ab- 108 Stat. 4150 & 4117- rogation § found influ- significantly case more The second violated the Reli applicability general case, Act of 1993 re- analysis Restoration in this Freedom ences our

gious (RFRA) free infringing it, on the church’s description. quires a more extensive As the case came religion. exercise of 627, 119 Prepaid, 527 U.S. S.Ct. Florida Court, question was whether to the (1999), 2199, 144 the Court use of Con RFRA was a constitutional abrogation attempted indicated that the Fourteenth to enforce the gress’ power Variety and Plant Protection the Patent RFRA concluded Amendment. Court permis- Act was not Remedy Clarification Due Process or merely enforce the did not had failed to iden- Congress because sible the Amend Clauses of Equal Protection patent infringement tify pattern ment, au Congress’ exceeded but instead States, of unreme- pattern much less a change what sought it thority because at -, Id. patent infringement. died those Clauses protected by rights Due at 2207. In order to violate the 2157. The were. Id. Fourteenth Amend- Process Clause remedial, rather that the indicated Court ment, said, the States would not the Court substantive, Congress’ power than basis also patent rights, invade but only have to congruence there to be “a requires deny patent use injury to be between proportionality compensation for those invasions. owners and the means or remedied prevented Boerne, said, City the Court de- Id. to that-end.” Id. adopted 5,§ “that for to invoke clared legislative noted that the 2157. The Court identify transgressing conduct must examples of the RFRA lacked record of pro- Fourteenth Amendment’s substantive generally applicable modern instances visions, legislative must tailor religious bigotry. passed laws because such remedying preventing scheme to or 529-31, 117 But 2157. RFRA’s Id. at S.Ct. rec- Id. Because of the limited conduct.” attempted it to major problem was by violations ord of constitutional change in constitution make a substantive States, failure to restrict Congress’ al Id. at S.Ct. protections. in Although the decision did not to the States to cases application Act’s abrogate attempt to Congressional volve a involving arguable constitutional violations provided it an ana immunity, the States’ proportion sup- out of rendered so subsequent for cases lytical framework object or that it posed preventive remedial that did. in response understood to be cannot be prevent unconstitutional be- designed or 1999, the Court decid-

In the summer of at -, at 2210-11. havior. Id. S.Ct. involving directly Congres- ed two cases Instead, abrogate appears the States’ the Act to have been attempts sional immunity that were claimed to remedy a uniform for provide intended to of its Fourteenth permissible exercises place the patent infringement and to power. enforcement The Amendment par- footing private on the same States invalid. attempts both to be Court found at -, patent under federal law. Id. ties Bank, cases, Savings College In one of the proper Arti- at 2211. These are 144 L.Ed.2d concerns, powers Article I cle I but the (1999), property ruled C,ourt abrogation attempted support cannot being under the rights allegedly protected Act. Id. Act Remedy Clarification were Trademark v. Florida recently, More Kimel Due rights by the property protected — U.S. -, Regents, Board Process Clause of the Fourteenth Amend- (2000), Court at -, 2224-25. ment. Id. S.Ct. at abrogation States’ ruled Act constitu- Consequently, the could not Discrimination immunity Age found immunity tionally abrogate the States’ (ADEA) Act also exceeded Employment protect rights. those Id. order Congress’ § 5 enforcement power. process deprivation of property unless —no Equal Protection Clause the Fourteenth procedures fair are used in doing so—and prohibits Amendment States from using process substantive due depriva —no age classifications that are not rationally- reason, tion for an arbitrary even if the Id., legitimate related to a state interest. procedures used are fair. Archuleta v. prohibit- 645-47. The ADEA Insts., Colorado Dep’t Div. Youth substantially ed more state employment Servs., (10th 936 F.2d 489-90 Cir. practices decisions and than likely would 1991); see also Tonkovich v. Kansas Bd. of be held unconstitutional under the rational Regents, 528-29 Cir. standard, equal protection basis and the 1998) (indicating substantive due legislative record did not show that Con- if government violated action shocks con gress had uncovered evidence a pattern judges, sciences federal standard that age unconstitutional discrimination may arbitrariness, be equivalent may Id., the States. 120 S.Ct. at 647-49. be measure of required arbitrariness shortcomings These two made the at- legislative executive rather than action to Id., tempted abrogation invalid. 120 S.Ct. violate process). substantive due Protect at 649. ing people deprivations from State of their

These cases indicate that only history solely based on their bankruptcy of constitutional violations of the substan- filing might provide a Fourteenth Amend provisions tive of the Fourteenth Amend- ment basis for if the Supreme ment the States can justify a statute Court would conclude that depriva such abrogating their in order to “en- tions are arbitrary “shock the con force” those provisions substantive Kras, sciences” of the Justices. them. To history determine what sort of Court also held that classifications based required would be con- on bankruptcy and challenged under the text, we must consider what substantive Equal Protection Clause are acceptable rights grants. the Amendment Certainly, supported by a justification. rational it express right bestows no bankruptcy 445, U.S. at 93 S.Ct. 631. Protecting peo Furthermore, of any relief sort. the Su- ple who file for bankruptcy from State preme Court has held that there is no discrimination solely based filing their constitutional right to a bankruptcy dis- might provide also a Fourteenth Amend charge, Kras, United States v. 106(a), ment basis for if Supreme 434, 446-47, 34 L.Ed.2d 626 Court would conclude that such discrimi (1973), and seems unlikely now to recog- justification. nation has no rational any nize general other bankruptcy rights 362(a) §§ Can they and might as inherent in the Constitution. The applied States, to the be viewed as Court has not Privileges relied on the and remedy tailored to prevent State con- Immunities Clause of the Amendment as a violating duct those Fourteenth Amend- source of an implied or unstated constitu- rights? ment stay The automatic imposed right tional for many years, relying instead 362(a) §by temporarily prevents creditors on the Due Process Clause as such a and other interested taking entities from source. Hosp., Sacred Heart 133 F.3d at certain actions people who file for 244-45 & n. 11. The Due Process Clause bankruptcy, provisional a remedy that of the prohibits Amendment a State from might, part, prevent in States from violat- depriving person a property without due 525(a) ing rights. those provides Section law, process of and we can assume without in pertinent part: deciding licenses, that least some per- (a) mits, charters, franchises, ... governmental and other simi- unit may [A] lar grants revoke, “property” protected deny, constitute not suspend, or refuse to by the license, charter, Clause. The Clause has been inter- renew a permit, fran- preted require chise, both procedural to, due grant or other similar condition 28-1163(B)). to, §Ann. Provi- discriminate with Ariz.Rev.Stat. grant [or] a such financial proof responsi- sions requiring ... a grant against, such respect to bility for a were not period future before is ... a debtor under this that person 642-43, 91 the Court. Id. at S.Ct. 1704. or' bankrupt because such solely title ... Supreme The Arizona Court had ruled ... a debtor under this title debtor is of the Act purpose main ..., com- insolvent before the has been protect public using highways from title, the case under this mencement of might financial result hardship from the case but before the debtor during by financially the use of irre- automobiles or has discharge, or denied granted sponsible persons. Id. dischargeable that is in a debt paid not quoting on and from Schecter (relying this title.... the case under Killingsworth, 93 Ariz. 380 P.2d 136 provision might This 11 U.S.C. (1963), citing many later cases follow- also, taking part, prevent in States Overruling this two ruling). of its arbitrarily or discrimi- debtors’ prior upheld that had similar state cases jus- without them a rational nating against laws, Court held Arizona Supreme So, Congress identified a tification. had provision Supremacy violated the Clause unconstitutionally acting history of States frustrating purpose the bank- stay, or taking property violation ruptcy discharge to free debtors from the discriminating against who people from or pressure discouragement most old 106(a) then bankruptcy, might filed for Thus, debts. Id. at 91 S.Ct. 1704. Congress’ power proper be a exercise attempt Perez a State’s only addressed the Fourteenth Amendment. enforce part of a impact avoid However, not to nor we have been directed discharge by forcing the debtor pay Congress indication has found discharged debt. when history, identified such either ever new adopted Bankruptcy When it H.R.Rep. see amended Code indicated that (1994),reprinted in 1994 No. 103-885 at H.R.Rep. codified Perez. No. 3340, 3350-51. or when it U.S.C.C.A.N. (1977); Cong., 95th 1st Sess. 366-7 §§ originally enacted S.Rep. Cong., No. 95th 2d Sess. part of the new Code. 1978 as far goes, that is true so as it While 525(a) alone, suggests For dissent we note also extended well Court’s decision Perez v. Supreme case, beyond Perez. In that Arizona had Campbell, 402 U.S. denied, revoked, suspended, or refused (1971), supplies necessary the to renew the debtors’ drivers’ and licenses history. Supremacy That case involved a they registration solely because had filed provision a in Ari challenge to Clause insolvent, bankruptcy only for or were but Safety Responsibility zona’s Motor Vehicle a debt they paid because had not that had Act, person against that a Act. Under discharged bankruptcy. por- been in The had judgment a been entered for 525(a) whom prohibit §of acting tions arising from an acci damages automobile a against solely filing for for person bank- or her dent could have his driver’s license ruptcy, being filing or for insolvent before suspended judg if registration cannot bankruptcy, accurately for thus sixty days, unsatisfied ment remained for Perez. said to be derived from In addi- suspension tion, would until and the continue it Arizona law appears required paid. Id. judgment debtors, was at just judgment all not those who challenged 1704. The de provision discharge, obtained bankruptcy pay a discharge bankruptcy “‘[a] clared that in judgments against arising them out of they get ... shall not relieve the debtor before judgment automobile accidents could requirements arti their renewed. The anti-discrimi- of this licenses ” 525(a), then, portions § nation not (quoting cle.’ Id. at 91 S.Ct. 1704 are Perez, 106(a)(1) passing, abrogation attempted either. In in in- really based us, we only valid even if must consider it in Wyo- that in note the case before we 525(a). ig- connection with We do not pay a ming require Straight did bankruptcy nore the court’s finding or For discharged dischargeable debt. 362(a) 525(a) §§ the DOT violated be- present purposes, although the Fourteenth Straight’s cause it DBE revoked certifica- Perez, Amendment was not involved in we tion automatic stay while the was in effect that the may assume States would violate solely because she had filed for bank- the Due Process Clause of the Amendment if in ruptcy, or condone the DOT’s actions took in they if from a debtor might fact so motivated. These actions Clause, of the or Supremacy violation a Straight’s even constitute violation of the Equal would violate Protection Clause Amendment, rights under the Fourteenth if in they against discriminated a debtor might and make this case one that contrib- of the Supremacy violation Clause. Nev- history rely ute to that Congress a could ertheless, a supplies history Perez at most abrogate immunity on to the States’ of unconstitutional State that could actions However, future for similar actions. 525(a) prohibition support Supreme Court’s decisions have made denying, revoking, suspending, refusing Congress clear that cannot assume license, charter, permit, to renew fran- might States violate debtors’ Fourteenth chise, person grant or other similar rights Amendment the future and abro- paid dischargea- who has not a debt that is gate immunity States’ based on been discharged. provides ble or has It no Instead, actually assumption. the States history doing indication States had a propensity demonstrate to take unconsti- things prohibited by the other actions, Congress may, acting tutional then authority within its to enforce the substan- The extensions of Perez found provisions tive the Fourteenth Amend- Supreme indicate to us that the ment, subject the forcibly private States to Court would conclude that failed parties’ suits future violations. provision involving to restrict the to cases Code, Con- arguable constitutional violations gress authority has exceeded This propor- States. renders it so out of of the Fourteenth Amendment. supposed tion to a remedial preventive object that cannot be to be in understood V. Conclusion to or response designed prevent uncon- denying court’s order behavior, stitutional which the said Court motion to Damages the DOT’s dismiss the Prepaid Florida to make required premised applica- Suit was on an incorrect Congress’ abrogation of the sover- States’ tion law of the case doctrine eign permissible of its exercise factual overlooked the differences between power to enforce the Fourteenth Amend- in Straight the Fee Order issue I and Instead, patent ment. somewhat like the Damages II and the Suit. More- Prepaid, law issue Florida over, inval- represents because an subject to have appears been intended to attempt abrogate id to the DOT’s sover- place to the States the limitations and eign immunity, Damages the be Suit must footing par- them on the same private as bankruptcy dismissed. The court’s order bankruptcy they ties would be under law if REVERSED, and is the case is remanded power regulate had the activities States’ to entry granting of an order the DOT’s licenses, requiring permits, and similar motion to dismiss. grants authority. of BOULDEN, Bankruptcy Judge, history of Because unconstitutional Dissenting. 525(a) § actions is so

State limited and in- many addresses so not analy- actions I much majority’s concur in of the that history, pivotal volved in that the case. On the of we conclude sis of this issue 422 106(a), 525(a), § it provision making applicable § it to tion to as relates

whether sover- abrogation sixty specific Bankruptcy of the States’ is a valid sections however, I dissent. I immunity, eign language The of abrogation Code. broad court affirm 106(a) would qualified, § it being was with now Damages proceed, to be- allow the Suit applicable respect only “with to” expressly 106(a) of abrogation § is valid cause provisions listed in subsection those Code read in sovereign when States’ (1). 106(a). § 11 U.S.C. § conjunction with fact, the courts have Despite 106(a) § constitutionality of Analysis of§ examined 1. A Constitutional Statute-by-Stat- only abrogation made general have looked at the on a must narrow, Basis failing qual- to ute language, apply See, ifying language. e.g., Sacred Heart language of history and current Pennsylvania Pub. Hosp. Dep’t v. Wel- to any analysis § test requires (In Hosp.), 133 re Sacred Heart F.3d con- fare constitutionality of the statute be (3d 237, Cir.1998); Department 243-44 Bank- separately specific for each ducted Manage- Dev. Transp. & v. PNL Asset 106(a)(1) §in section listed ruptcy Code (In Fernandez), ment Co. LLC re 123 F.3d plaintiff relief under which seeks (5th 241, Cir.1997); Schlossberg 245 Ma- 1994, Congress attempt- a State. Prior Comptroller Treasury ryland re immu- abrogate toed States’ D.C., Washington 106(c)1 Creative Goldsmiths statutory lan- nity under with Cir.1997), (4th Inc.), 1140, 1146-47 applicable that made the statute guage denied, 1075, 118 rt. 523 U.S. S.Ct. any provision Code ce 1517, (1998); L.Ed.2d In re Mer “trigger words.” 140 670 which contained certain Cir.1995), 1994). 106(c)(1) Grain, Inc., Af- F.3d 630 (repealed chants 59 U.S.C. 106(c) vacated, held to be an granted ter former rt. and decision ce 1130, abrogation sovereign immunity invalid 517 U.S. S.Ct. 134 L.Ed.2d express an unequivocally because it did not contrary This view is abrogate, intent to Connecticut 106(a), plain language gen- and to the Hoffman Maintenance, 492 Department Income rule that ev- statutory eral construction 2818, 106 L.Ed.2d of a have ery provision statute must some (1989); see v. Nordic Vil- United States See, operative e.g., effect. v. Met Walters Inc., lage, 503 U.S. Enters., Inc., Educ. ropolitan (1992), Congress L.Ed.2d 181 amended S.Ct. the Bankruptcy 106 under Reform Act (1997); Nordic Village, 503 U.S. (Oct. 22, Pub.L. 103-394 No. 1011; Hoffman, 492 U.S. at 1994). It contrary 2818. is to the rule also Congress presumed is to have intend- In what is now statute, provisions ed to include within a only abrogate made intent that such sovereign immunity unequivocally purpose- inclusions must be States’ See, States, clear, changed abroga- e.g., ful.2 v. United dramatically Russello 106(c) 1994). 106(c), prior (repealed 1. Section stated: 11 U.S.C. (a) provided reading as it

Except [deal- I note also re- in subsections (b) [dealing with lates to in accord with the “doc- waiver] with off- doubt,” notwithstanding general- of this trine of constitutional which set] section and " 'every sovereign immunity- ly holds that construction assertion (1) reasonable to, provision must in order statute] title that contains be resorted [of of this ” "creditor”, unconstitutionality.’ “entity”, "governmental save Edward [it] units; applies governmental Corp. to Coast Build- unit” J. DeBartolo v. Florida Gulf Council, 568, (2) by of an & Constr. Trades 485 U.S. determination the court issue 575, 1392, (1988) gov- arising provision S.Ct. L.Ed.2d 645 under such a binds 108 99 648, California, (quoting Hooper U.S. units. 155 ernmental

423 — 16, 22, 296, Regents, -, 464 U.S. 104 S.Ct. 78 L.Ed.2d v. Florida Bd. U.S. (1983); 631, 17 Hearn v. 644-45, Western 120 S.Ct. 145 L.Ed.2d 522 Conference of (9th Teamsters, 301, Cir.1995); 68 F.3d 304 (2000); College Bank v. Sav. Florida Pre- Milberg see also Lexecon Inc. v. Weiss Bd., paid Postsecondary Educ. Expense Lerach, 35, 26, Hynes Bershad & 523 U.S. 666, 2219, 2224, 527 U.S. 119 S.Ct. 144 (1998). 956, 140 118 S.Ct. 62 L.Ed.2d (1999); L.Ed.2d 605 Prepaid Florida Post secondary Expense College Educ. Bd. v. reading applies A of the statute that Bank, 627, 2199, Sav. 527 U.S. 119 S.Ct. language and plain statutory the rules of 2205-2206, (1999). 144 L.Ed.2d I 575 con- construction, mandates 106(a), clude that as it relates conjunction particular read with the 525(a), validly abrogates the States’ sov- provided Code section for in subsection ereign immunity because it both implicates under which debtor seeks affirmative the Fourteenth Amendment it ap- is Here, relief. damages seeks propriate legislation under Boeme. against the DOT related to its violation of 525(a), §§ my analysis 362 and so is con-

fined those sections.3 106(a), A. Section as it relates 625(a), implicates II. The “Valid Exercise of Power” Test Fourteenth Amendment As the majority, discussed the second express No language required is prong of the two test part Seminole prove that a statute implicates the Four- Florida, 44, 55, Tribe v. 517 U.S. 116 S.Ct. “Congress teenth Amendment. 1114, need not (1996), 134 L.Ed.2d 252 instructs ‘recite the words’ ‘section 5’ or ‘Fourteenth Congress may only abrogate the ... Amendment’ when enacting pur- laws sovereign immunity States’ if it acting is power, suant to this pursuant [but] to a does power” “valid exercise of explicitly not identify the -source of its 5 of the Fourteenth Amendment. Amendment, power The “valid as the Fourteenth power” requires exercise of test that the there must be question something statute in about the act implicate Amendment, connecting recognized Fourteenth and meet certain Fourteenth set in City limitations as forth Boerne v. Amendment aims.” Hospi- Sacred Heart Flores, 507, (citation 518-19, tal, 521 U.S. S.Ct. 133 F.3d at and internal (1997). 2157, omitted); Kimel, 138 L.Ed.2d 624 quotations See Kimel accord 657, 207, (1895)); States, 227, 15 S.Ct. 39 L.Ed. 297 ac- Jones v. United 526 U.S. 1215, States, 651, (1999); 119 S.Ct. cord Edmond v. 143 L.Ed.2d 311 ac United 520 U.S. cord, States, 658, v. United (1997). Almendarez-Torres 117 S.Ct. 137 L.Ed.2d 917 224, 237-38, U.S. Thus, (1998); Branson School Dist. susceptible "where a statute is of two con- Romer, RE-82 v. 636 -, structions, by - grave one of which Cir.1998), denied, cert. U.S. questions doubtful constitutional arise and 143 L.Ed.2d 546 questions the other of such are which argues, majority part, 3. The that because avoided, duty adopt our is to the latter.” may applicable many be made Attorney United States ex rel. General v. De implicate Code sections which do not Co., 366, 408, laware & Hudson action which involve State action that is (1909).... [29 S.Ct. 53 L.Ed. It 836] whole, 106(a), wrongful, § on a is not respect Congress, is "out of which we preventing violating "aimed at States from legislates light assume of constitu- Supra, p. the Fourteenth Amendment.” limitations,” Sullivan, tional Rust v. analysis, analysis This like the of the circuit 114 L.Ed.2d holding § courts to be unconstitution- (1991), principle, that we adhere to this al, scope does not narrow the of review to the long applied by which "has for so been particular being facts of the case considered. beyond Court that it debate.” Edward J. only issue in this case is whether Corp., DeBartolo 485 U.S [568 at] [108 §§ as it relates to 362 and (1988)].... constitutional.

424 Barrett, (1972); accord Greene v. 548 174 644; Opportu- Equal Employment at

S.Ct. Cir.1999). 226, (10th 1136, Discuss- Wyoming, 460 U.S. F.3d 1140 v. nity Comm’n 1054, L.Ed.2d 18 18, 75 interest property 103 S.Ct. of a 243 n. the definition Klutznick, (1983) Clause, 448 v. (citing Fullilove the Due Process under protected 2758, 65 448, 100 S.Ct. Bank, U.S. 119 College Savings the Court (1980); Cloyd v. W. Woods 2225, of a “The assets S.Ct. at stated: 144, 421, 138, Co., 68 S.Ct. Miller 333 U.S. will) (including good unques- business (1948)). that a It is sufficient L.Ed. 596 92 taking and state tionably property, are au- reasonably” have been statute “could ‘depri- unquestionably a of those assets is Amendment, Fourteenth by the thorized Amend- the Fourteenth vation’ actu- necessary it is not ment.” authority. to invoke ally intended circumstances, protected Deaf, Under certain Kentucky School Franks v. assets, (6th Cir.1998); 360, see interests include business property 363 licenses, n. grants, at 243 or enti- permits, 460 U.S. Equal Employment, such 1054; Lake Erie Wheeling & 103 units. governmental S.Ct. issued tlements Comm’n, 141 Utility v. Public Railway Co. gives people a benefit state law “Where (3d Cir.1998); v. creates, 92 F.3d nondiscretionary system Crawford (8th Davis, 1281, 1283-84 Cir. F.3d 109 or renewal of revocation governing rules 1997). benefit, a secure recipients have right, legitimate property and durable provides Amendment The Fourteenth v. La Cornelius any person of claim of entitlement.” “deprive that no shall Cir.1988) (7th Croix, F.2d ... without due property ... Const, XIV, (similar § l.4 The to a (discussing amend. MBEs law.” U.S. whether Clause,” therefore, applies DBE) contract-by-contract “Due Process certified on a “protected of a “deprivation” only to a property represented protected basis “due by a State without property interest” v. Group, Am. Inc. right); see North Bank, 119 College law.” Sav. process of 401, 1997 WL Wayne, 106 F.3d County of 2224; Prepaid, 119 Florida S.Ct. S.Ct. at 1997) (6th Jan.28, (unpublished Cir. at 2208-09. decision) interest (plaintiff property had a

(a) interest property “legitimate Protected DBE if it had a certification posses- entitlement” to continued claim of property protected of a “The hallmark sion, Roth, 92 S.Ct. citing 408 U.S. to exclude others.” right interest is the Contractors, 2701); City Baja Inc. Bank, 2224. The College Sav. F.2d 676-77 Cir. Chicago, 830 is whether the holder test action, 1987) (in injunction preliminary claim of entitle- legitimate has “a interest contractor, City had violated Roth, asserting Regents v. ment to it.” Board of Clause, likeli- Due Process established 564, 577, 33 L.Ed.2d U.S. regard as fundamental Court has come to also states: 4. The Fourteenth Amendment any person deny to within lofty requirement "No State shall ... of a com- that demand the jurisdiction equal protection of the its laws.” U.S. they may governmental before pelling interest Const, XIV, § 1. Section amend. significantly regulated. Neither does Equal implicate the appear to does not be the upon what have been said to touch Fourteenth Amend- Protection Clause of the race, nationality, or alien- suspect criteria of section, ment, although which the title to that so, applicable being stan- age .... This discriminatory protection references dard, Congress' measuring propriety of treatment, text, to dis- which refers and its classification, justification.” is that of rational crimination, See may indicate otherwise. (citations omitted)); also United States see Kras, United States v. Utah, Inc., Reorganized I Fabricators CF & (1973) ("Bankrupt- L.Ed.2d marriage hardly speech or cy is akin to free (subtitle heading is not in statute many are rights, so of which or to those other Amendment, controlling). that the in the First imbedded deliberate, merely rather than protected negli- that it had a be showing hood of gent.”); MBE be- Tonkovich v. Kansas Bd. Re- interest in certification property (10th Cir.1998) gents, that ben- 159 F.3d City already conferred cause it). (there is some indication the “shocks the efit upon conscious” standard of substantive due (b) Deprivation process without due process and the “arbitrariness” standard A of the Due Process Clause of violation interchangeably applied are used when possible Amendment is not the Fourteenth action); administrative see also person it that a is unless is demonstrated Greene, (finding 174 F.3d at 1141 a de- inter- “deprived” protected property of its privation property interest of sheriffs Prepaid, Florida process. est without due process and denial of due where rank requires a at 2208. This' element hearing sheriff had no before his reduc- showing protected that the holder of the rank); Blue tion Diamond Coal Co. remedy, only interest had “no or property Angelucci re Blue Diamond Coal remedies” the State’s inadequate (Bankr.E.D.Tenn.1992) Co.), 145 B.R. 895 taking protected property of its interest. (discussing Fourteenth Amendment due intentionally Id. The must also act State process claim and 525 claim related to interest, taking protected property self-insurance). revoking certificate of taking may rather than a that have oc- (c) Fourteenth Application of through negligence curred or mistake. Amendment elements to Id., 119 S.Ct. at 2209. govern- Even there is an intentional case, Relating these factors to this I a taking protected property mental Congress legislating conclude that un- interest, there is no violation of der 5 of Fourteenth Amendment Fourteenth Amendment unless the tak- 106(a), it when enacted relates to ing process. occurs without due Proce- Klee, See Kenneth N. O. James process dural due ensures that a State Johnson, Winston, Eric& State Defiance deprive person property, will not a Law, 52 Vand. L.Rev. procedures unless fair are used mak- (§ create a may 1545-51 pro- that decision. Substantive due exception” finding “limited guarantees cess will not constitutional) and (recognizing 1578-81 property an ar- deprive person of may Prepaid that under Florida there reason, bitrary regardless of fair how as it instances where relates procedures are are used (1), may the sections in subsection be con- making the decision. Archuleta v. Colo- if the section to which it relates stitutional Insts., Dep’t rado Div. Youth property protected deals with interests Servs., Cir.1991); 936 F.2d Clause). Due Process under the City Draper, see Clark v. (“An (10th Cir.1999) 525(a)5 terms, arbitrary By express applies deprivation property specifically of an individual’s to a narrow set of enumerated li- right compo- property applies only can violate the substantive interests. It charters, censes, franchises, permits, nent of Due clause of or Process rights granted by ... similar If the [but] Fourteenth Amendment State. legitimate an has a substantive due claim” must holder of such interest it, conscience,” property reach claim of entitlement “[t]o “shock the level, government protected under the Fourteenth action must interest differ, (10th Cir.1998) (holding we need that under certain Since our facts not address portion proscribing here that regulation can conditions state statute employment of a State’s termination debtor’s protected property create a interest in em- solely bankruptcy filing. because of a He rank). ployment status Shawnee, nnigh City 155 F.3d tive law is not prevents change governing also Section Amendment. discern, easy the holder of must have depriving the States It pre- determining interest. latitude in where it protected wide intentionally6 deny- lies, and must be cludes the States the distinction exists refusing or to revoking, suspending ing, congruence observed. There must be a grant simply other be- injury renew a license or the proportionality between status as a debtor or cause of the holder’s or remedied and the prevented to be insolvent, debt discharged because a or adopted Lacking to that end. means All goes unpaid. the holder by connection, owed legislation may such a be- acts would constitute a proscribed these operation and effect. come substantive in relation to a deprivation they occurred Id., quoted Prepaid, in Florida S.Ct. protected property interest. Section Kimel, 2206; at 644. accord S.Ct. 525(a), 106(a), it also assumes as relates The Court in Boerne “held that for Con debtor, protect- a the holder of the as identify § gress to invoke it must con interest, have “no reme- property ed would transgressing duct the Fourteenth Amend dy, inadequate against or remedies” the must provisions, ment’s substantive its interest because it taking State’s remedying legislative tailor its scheme to that, sover- presumes abrogated, unless preventing or such conduct.” Florida Pre eign immunity preclude an action would 2207; Kimel, paid, 119 S.Ct. at accord 525(a) the also im- State. Section doing, at 644. In so the courts must plicates substantive due because it “guided by principle pro that the arbitrary governmental taking proscribes any § priety legislation ‘must be a holder’s sta- solely upon property based judged historical ex with reference insolvent, tus or or because such as debtor ” perience ... it reflects.’ Florida Pre pay discharged fails to or dis- holder Boerne, paid, (quoting 119 S.Ct. at chargeable debt. 2157). 525, 117 521 U.S. at 106(a), applies B. it Section as test, Boeme, Applying Court 525(a), legislation is appropriate Kimel, Prepaid and later in Florida under Boeme legislative history looked to the of the stat- implicating In addition to 5 of the question utes in to determine whether 106(a), Amendment, § as it re- Fourteenth there was evidence of a Fourteenth 525(a), legislation appropriate lates to required Amendment violation that a rem- Boerne, edy. question There is no there is majority, 2157. 5.Ct. As discussed legislative history regarding scant Boerne, Congress’ held that Court pattern depriv- that recites a of the States powers under 5 of the Fourteenth of their protected property debtors’ limited “enforcing” Amendment are process solely interests without due be- §in 1 of the Amend protections set forth cause of their as debtors or insol- status not, therefore, may de vents, ment. discharged or because debts had not 1,§ may only fine but rather However, violations of paid. expe- been the “historical vio legislation enact that “remedies” such §of rience” indicates holding, lations. In so Court stated: by Congress response spe- to a enacted problem Supreme line measures that cific identified in 1971 in While the between Servs., remedy prevent Exquisito unconstitutional ac- Court case law. See Inc. Servs., that make a re Exquisito tions and measures substan- v. United States Prepaid, conjure a where a Compare Florida 119 S.Ct. at 2205- is difficult to circumstance (Patent governmental negligently Remedy implicate unit could commit a Act did Amendment; solely taking per- based on the Fourteenth the Act was drafted debtor, insolvent, negligent in a manner include acts son’s status as a or because that would patent infringement). discharged of a debt. as well as intentional It nature (5th Cir.1987) (de- Inc.), infringement protected proper- of State 525). ty rights history of In 1973- result of debtor’s status scribing the discharge in 1978 when it enacted amendments to the proposed when it would have meant that States being Act were dis- former failing had been adhere Perez for debated, problems cussed and prior years seven since Perez was is- already was meant to solve had been iden- sued. Supreme tified Court and there was testimony

no need for and debate on the Not only “remedy” imper- does issue. missible State conduct as identified Per- ez, attempt rather than to define Four- 525(a) a of Perez Section is codification violations, teenth Amendment but is also 637, 1704, 402 Campbell, U.S. 91 S.Ct. narrowly in harmony drafted so as to be (1971). 595, H.R.Rep. 29 L.Ed.2d 233 No. in proportion alleged with and to the con- (1977); Cong., S.Rep. 95th 1st 366-7 Sess. Boerne, stitutional violation. 521 U.S. at 989, Cong., No. 95th 2d Sess. 81 532, 2157; accord, Kimel, 117 S.Ct. 120 In Perez the Court concluded that 647; Prepaid, S.Ct. at 644 & Florida Supremacy part Clause7 invalidated a 525(a) S.Ct. at 2206 & 2209. Section not is Safety Responsi- Arizona’s Motor Vehicle proportion supposed “so out of to a reme- bility being Act as in conflict with the preventive object dial or that it cannot be mandate 17 of the former to, responsive understood as or designed attempt- Act. Perez made clear that it was prevent, to unconstitutional behavior.” ing to foreclose State actions that had the Boerne, 2157, at “ 521 U.S. S.Ct. ” ‘plain collecting and inevitable effect’ of Kimel, 647; in at quoted Florida debts, thereby discharged contravening Prepaid, Specifically, 119 S.Ct. at 2210. purpose bankruptcy of the laws. Per- 525(a) narrowly group defines a select ez, at 1704 (quoting “property protected by interests” Dep’t Safety, Kesler v. Public 369 U.S. i.e., licenses, Amendment, per- Fourteenth 153, 183, mits, charters, franchises and similar (Black, J., dissenting)). grants may legiti- to which a debtor have a Boeme, Unlike the statutes in Florida 525(a) mate claim of entitlement. Section Kimel, Prepaid, where the Court narrowly specifies prohibited also Congressional found little evidence conduct, ie., denial, revocation, intentional record in- support pattern to a of State or a suspension, protected refusal to renew fringement protected rights upon which property solely interest because of the 525(a) action, § to base remedial was en- insolvent, holder’s status as a debtor or codify acted to what the Court itself held repay discharge- of its failure to because to be The unconstitutional State conduct. discharged able or debt. Id. Unlike the 525(a) legislative history lack of legislation Prepaid, considered Florida identifying pattern of Fourteenth §in cannot prohibited the activities violations, therefore, Amendment is not negligence part come about due to on the Congress defining, an indication that reme- drafting of the State. This narrow opposed remedying, Perez, such violations. problem dies the identified there- Indeed, prior to the enactment acting in con- by preventing States from prevented Perez the States from purpose bankruptcy flict with the depriving debtors of the inter- “give opportunity, laws to debtors ‘a new effort, protected ests therein. If had life and a clear field for future and diseour- identify pervasive pattern unhampered pressure been able to Supreme unnecessary 7. At footnote indicates that the bank- Court found it Perez rupt alleged the Arizona denied Four- statute address this 402 U.S. at 644 n. claim. equal teenth Amendment due S.Ct. 1704. protection. Unfortunately purposes, for our ” Perez, majority ruling debt.’ with the as it related to agement pre-existing Therefore, I (quoting disagree 91 S.Ct. 1704 Adolfo Perez. 402 U.S. Hunt, 525(a)’s attempt prohibit governmen- Local Loan Co. v. (1934)). upon bankrupt L.Ed. 1230 tal action based status as a debtor, bankrupt with a or association majority is The contends to, accurately is unrelated or cannot really based on Perez because it is from, said to be derived Perez. attempt much broader than a State’s part impact avoid of a history legislative The also discharge by forcing pay the debtor to codify makes clear that it was enacted to discharged debt which was the issue ad- H.R.Rep. Cong., Perez. No. 95th 1st respectfully disagree. in Perez. I dressed (1977); S.Rep. Sess. 366-7 No. 95th majority which the portion (1978); Cong., Hearings 2d Sess. 81 on S. impermissible an expansion finds to be of 234 and S. 236 before the Senate Sub- prevents govern- Perez section Improvements comm. on Judicial Ma- upon ment action status based debtor’s Sess., chinery, Cong., p. 94th 1st having bankruptcy, being filed for insol- (1975) (testimony Kennedy) of Prof. Frank bankruptcy, being vent before or associat- Hearings”].8 “1975 Further- [Hereinafter bankrupt My reading ed with a or debtor. more, § language results of Perez indicates the facts of the case Congress’ attempt pro- to narrow Perez, language match the discriminatory originally scribed behavior both Adolfo and Emma Perez filed bank- in originally pro- discussed Perez. As However, Perez, ruptcy. only driving Mr. posed, pro- the anti-discrimination statute registered car his name but com- vided: Ari- munity property under the laws of Against Section Protection Dis- Í-508. zona, was involved in an prepeti- accident criminatory A person Treatment. shall tion. Both Mr. and Mrs. Perez confessed subjected discriminatory not be treat- judgment, and both Mr. and Mrs. Perez’s he, any person ment because or with registration drivers licenses and were sus- associated, whom he is or has been is or pended. As stated Justice Blackmun’s pay has been debtor or failed to a debt concurrence, “Emma, driver, a fault-free discharged in a case under Act. This solely ‘is without her license because she is consideration, preclude action does not impecunious impecunious, wife of an relevant, where of factors other than negligent community property driver in a specified preceding those sen- ” Perez, state.’ 402 U.S. at 91 S.Ct. tence, present prospective such as and brief). 1704 (quoting amicus The concur- managerial ability. financial condition or rence, Perez, as it relates to Emma con- cludes that the Arizona Report statutes interfered of the Commission on the Bank- States, bankruptcy with her discharge ruptcy and violat- Laws of the United H.R. Clause, Sess., Supremacy disagreed ed the but Doc. No. 2 Cong., 93d 1st Pt. Testifying 8. as to “the record that led” to the Court in Both these in- cases Perez. proposed legislation, legislation, anti-discrimination Pro- volved similar to that ad- Perez, licenses, Kennedy depriving fessor stated: Commission dressed in "[T]he debtors of thinking primarily, exclusively, having "plain was if not and and inevitable effect” of imposed by circumventing bankruptcy discriminations the Government. law. In his testi- seeking implement mony Congress, We were Kennedy before Professor re- Perez Hearings, p. regulations at case.” 1975 37. I note also fers to other State statutes and giving "depriving persons opportunity the "record” rise to anti-discrimination of economic Perez, legislation only gone they included not but also because had into a Dep't 807, Safety, discharge bankruptcy,” Kesler Public 369 U.S. had obtained a that, Perez, although and not before the Court in Reitz Mealey, type L.Ed. were within the of State action disal- (1941), by by Hearings, p. both of which were overturned lowed 37. Perez. process, upon pretext, without due a mere was later provision This at 143-44 legal when conclusion and without is now an incorrect modified to what reme- complaints hearing. Straight that it was afforded “no Congress received broad, thereby going beyond prob- dy, only inadequate against remedies” too by majority because, both the abrogation as discussed lems the DOT absent Hearings, 106(a), concurrence Perez. sovereign immunity provided in Kennedy) Frank (testimony of Prof. p. 37 recovery no action the DOT was (testi- authority), p. (citing supporting allowed. The DOT’s revocation mony Vaughn W. on behalf of Walter principles Certification also offended DBE Bankers Ass’n & Consumer the American due because it was of substantive (testimo- Ass’n), pp.& 146 & 173 Bankers solely Straight’s status as a debt- based Wiese, Jr., of Alvin Chairman of ny which, 525(a), impermissible under is Fo- Bankruptcy of the Law Subcomm. on arbitrary. Ass’n). the Nat’l Consumer Fin. rum of facts, by appellate supported These therefore, 525(a), narrowly Section 106(a), record, demonstrate that identify the interests specifically drafted to 525(a), by was enacted Con- applies to pro- the State conduct protected and pursuant power to a valid exercise of gress scribed. 5 of the Fourteenth Amendment. III. as it Relates Section implicated The Fourteenth Amendment is 525(a), Applied to the Facts Straight’s pro- deprivation the DOT’s this Case pro- property interest without due tected revoked undisputed It is that the DOT cess, was enacted Con- DBE to which certification Centerline’s set forth gress within limitations entitle- Straight legitimate had a claim of Boeme. license,

ment, per- which is akin to a similar in violation of grant, mit or other § it Relates to Section as IV. 525(a). § The DBE Certification was § 362 dominion,” “exclusive Straight’s within II,9 and, an Straight asset of as held the conclusion My dissent is based on DBE Straight’s business. Centerline’s that, majority, I would contrary to the inter- property certification is therefore be- Damages proceed allow Suit protected Fourteenth est 525(a), 106(a), § § it relates to cause as Contractors, Baja Amendment. See sov- constitutionally abrogates the DOT’s had (plaintiff F.2d at 676-77 established analysis A em- ereign immunity. separate showing protect- that it had a likelihood of above is the same criteria set forth ploying in MBE certification ed interest 106(a), § it whether as required to review City already had conferred because impli- relates to the other section it). upon benefit Suit, a valid abro- Damages cated in the is an immunity. Such gation revocation of Centerline’s The DOT’s the ele- identify as much to analysis serves specifical- DBE was an action Certification constitutionality Further, prove ments that §in it was ly proscribed as it does intentional, applies as to a opposed negligent an as 106(a), applied as affirm that deprived revocation act. The DOT’s mus- pass does not constitutional property interest Straight protected of her II, every quest was in Straight in this the Debtor Tenth stated: Circuit seeking property of the the return of Straight initially sought the restora- sense Ms. ... prior owned concept broadly tion of the certificate she defined in as that is estate essential to the con- that was 541(a)(1). U.S.C. postpetition business.... We duct of her II, 143 F.3d at 1391. believe, therefore, there can be no .doubt 525(a), ter.10 Section unlike so application that it cannot be said

broad legislation spirit to be remedial Boerne.

V. Conclusion above, forth I

For the reasons set re- I spectfully dissent because conclude 525(a), validly it relates to as abrogates sovereign immunity, the DOT’s Damages

and therefore the Suit should be proceed. allowed to KELLMAN, In re Freda Lois Debtor. Jones, Chapter P. Gordon Trustee, Plaintiff, Kellman, Allen I. Defendant. Bankruptcy No. 98-08311-3F7.

Adversary 99-188. No. Court, United States Florida, M.D. Jacksonville Division.

Dec. implicate pro- grounds terminating, 10. Not all annulling, actions under exist for property rights, Further, tected which is a threshold modifying, conditioning stay. requirement under the Fourteenth Amend- though stay may actions that violate the occur Instead, 362(a)(1) (2) preclude §§ ment. process, may without due such actions also applies actions a debtor. Section 362 process proceed- commence or continue due units, governmental to entities in addition to 362(a)(1)- ings in other courts. 11 U.S.C. only governmental but implicated units are short, 362 was drafted to under the Fourteenth Amendment. of Instead proscribe spectrum such a broad of activities preventing "deprivation,” pre- against both the debtor and estate it does until, upon cludes certain activities motion implicate the Fourteenth Amendment. 362(d), pursuant §to the court determines if

Case Details

Case Name: Straight v. Wyoming Department of Transportation (In Re Straight)

Court Name: Bankruptcy Appellate Panel of the Tenth Circuit

Date Published: May 15, 2000

Citation: 248 B.R. 403

Docket Number: BAP No. WY-99-020. Bankruptcy No. 95-10007. Adversary No. 96-1008

Court Abbreviation: 10th Cir. BAP