Hoffman v. Connecticut Department of Income Maintenance

RESPONDENT: Connecticut Department of Income Maintenance
LOCATION: Florida Star Newspaper

DOCKET NO.: 88-412
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 492 US 96 (1989)
ARGUED: Apr 19, 1989
DECIDED: Jun 23, 1989

Clarine Nardi Riddle - on behalf of the State Respondent
Martin W. Hoffman - on behalf of the Petitioner
Thomas W. Merrill - on behalf of the Federal Respondent

Facts of the case


Media for Hoffman v. Connecticut Department of Income Maintenance

Audio Transcription for Oral Argument - April 19, 1989 in Hoffman v. Connecticut Department of Income Maintenance

William H. Rehnquist:

We will hear argument now in Number 88-412, Martin Hoffman versus Connecticut Department of Income Maintenance.

Mr. Hoffman.

Martin W. Hoffman:

Mr. Chief Justice, and may it please the Court:

At issue before the Court this afternoon is whether or not the unmistakably clear language in 106(c) of the Bankruptcy Code waives Eleventh Amendment immunity from suit in the federal court when a trustee in bankruptcy has brought a cause of action under Title 11 of the Bankruptcy Code, 542(b), 547(b) of the Bankruptcy Code, seeking to collect retroactive monetary damages from the State of Connecticut, and whether or not Article I, Section 8, Clause 4 and 18 of the Constitution would abrogate Eleventh Amendment immunity.

I was appointed trustee in both of these cases, Your Honors, and in both of these cases as Trustee, I analyzed the cases to see what assets were available or that should be liquidated by the Trustee in these proceedings.

In the case of In re Willington, since this was two unrelated bankruptcy cases that were combined as one case in the Second Circuit Court of Appeals, there was a cause of action against the State of Connecticut which had filed a chapter... which for $64,000 for unpaid monies due and owing to the estate as a result of services performed by Willington, a debtor in possession in a Chapter 11 proceedings.

That case was voluntarily... it was voluntarily changed to a Chapter 7 proceedings by the debtor in possession.

And as Trustee, I brought a cause of action under 542(b), 11 U.S.C. 542(b) of the Bankruptcy Code seeking to recover from an entity that had received... received services, the payment of money from that entity to the trustee.

In the case of Zera, In re Zera, Mr. Zera was running a small lawn maintenance business and just a few days prior to his filing a bankruptcy proceedings, the state recovered $2,000 by means of a preferential transfer.

In that case I made demand upon the state to collect the preference payment.

Again, I was refused, and as Trustee I brought a cause of action in accordance with 11 U.S.C. 547(b) and 558.

Byron R. White:

Where did you bring it?

Martin W. Hoffman:

I brought both of these actions, Your Honor, in the Bankruptcy Court.

Byron R. White:

Before whom?

Martin W. Hoffman:

Before The Honorable Judge Krechevsky.

Byron R. White:

The bankruptcy judge?

Martin W. Hoffman:

The bankruptcy judge.

And in both of these cases, these suits were brought under the authority of 28 U.S.C. 1334(b) and 28 U.S.C. 157, which would allow the Bankruptcy Court as an adjunct of the District Court to hear both of these cases, Your Honor.

In both of these cases the court... the State of Connecticut filed a motion to dismiss which was denied by the Bank... raising a defense of sovereign immunity, and in both of these cases, the Court found... denied the state's motion.

The proceedings were appealed by the State of Connecticut in both cases to the District Court in Connecticut, which found against the Trustee.

I took an appeal to the Second Circuit of Appeals... Sixth... Second Circuit Court of Appeals... which sustained the District Court and basically... since this case is in conflict with a Seventh Circuit case, In Re: McVey, we are here today arguing these motions.

The clear language of 106 is basically the starting point, I believe, for the argument.

When Congress enacted the Bankruptcy Code in 1978 by means of a... passing the Bankruptcy Reform Act, what it basically did was overhaul, change, codify the Bankruptcy Act of 1898, which had been in existence up until that time.

The Bankruptcy... I mean the... Congress in 1965 basically started working on changing the Bankruptcy Act.

It took them approximately... I mentioned 1968 because it took them approximately 10 years to enact the Bankruptcy Reform Act of 1978.

One of the sections that they dealt with was 106 of the Bankruptcy Code.

It seemed that they worked on 106 over a long period of time because at the beginning they were only dealing with 106(a) and (b).

That was a situation where they knew that... they had 106(a) and 106(b), and they came up with a conclusion that the state by filing a proof of claim in the Bankruptcy Court asking for something from the court, acknowledging the jurisdiction of the court by filing a proof of claim, therefore, they would waive their sovereign immunity claim, and they would give the court the jurisdiction to, in 106(a), utilize the... by means of a compulsory counterclaim the ability of a debtor or a trustee to recover retrospective monetary damages from the state.

That is, if the state filed a proof claim alleging there was $100 owed to it under a contract and the trustee under that same contract or debtor in possession or debtor had a claim for $1,000, that by means of a compulsory counterclaim the estate or the debtor would collect $900.

Byron R. White:

What about some claim against the state unrelated to their claim?