Hardy, In re, No. 94-9089

• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)
• Writing for the Court: Before BIRCH and BARKETT; EDWARD S. SMITH
• Citation: 97 F.3d 1384
• Parties: -6925, 96-2 USTC P 50,635, 36 Collier Bankr.Cas.2d 1596, Bankr. L. Rep. P 77,146 In re Pierce Lamar HARDY, Debtor. Pierce Lamar HARDY, Plaintiff-Appellant, v. UNITED STATES of America, acting By and Through the INTERNAL REVENUE SERVICE, Defendant-Appellee. Sylvia Ford Drayton, Barnee C. Baxter, Trustees.
• Decision Date: 21 October 1996
• Docket Number: No. 94-9089

Page 1384

97 F.3d 1384 78 A.F.T.R.2d 96-6925, 96-2 USTC P 50,635,
36 Collier Bankr.Cas.2d 1596,
Bankr. L. Rep. P 77,146 In re Pierce Lamar HARDY, Debtor.
Pierce Lamar HARDY, Plaintiff-Appellant,
v.
UNITED STATES of America, acting By and Through the INTERNAL
REVENUE SERVICE, Defendant-Appellee.
Sylvia Ford Drayton, Barnee C. Baxter, Trustees. No. 94-9089. United States Court of Appeals,
Eleventh Circuit. Oct. 21, 1996.

Page 1386

Scott J. Klosinski, Augusta, GA, for Plaintiff-Appellant.

Gary R. Allen, John A. Dudeck, Jr., Loretta C. Argrett, Gary D. Gray, U.S. Dept. of Justice, Tax Division, Washington, DC, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before BIRCH and BARKETT, Circuit Judges, and SMITH, ^* Senior Circuit Judge.

EDWARD S. SMITH, Senior Circuit Judge:

Debtor Pierce Lamar Hardy appeals the decision of the United States District Court for the Southern District of Georgia denying him relief against the Internal Revenue Service ("IRS") under the permanent injunction provision of 11 U.S.C. § 524(a)(2). The district court dismissed Hardy's action due to lack of jurisdiction after finding that there was no express unequivocal waiver of sovereign

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immunity allowing recovery under § 524. Hardy v. United States (In re Hardy), 171 B.R. 912 (S.D.Ga.1994). Due to the intervening enactment of the Bankruptcy Reform Act of 1994, Pub.L. No. 103-394, 108 Stat. 4106 (1994), we find that Congress has waived sovereign immunity for violations of 11 U.S.C. §§ 524 and 105, and that, therefore, the district court has subject matter jurisdiction over the case. We remand to the district court to make findings of fact, determine liability and, if warranted, assess damages and attorney fees consistent with 28 U.S.C. § 2412(d)(2)(A), 26 U.S.C. § 7430, and our recent decision in the companion case of Jove Engineering, Inc. v. Internal Revenue Service, 92 F.3d 1539 (11th Cir.1996).

Facts ¹

On January 7, 1986, Hardy filed a Chapter 13 petition for bankruptcy, listing IRS as a creditor in the filed schedules. In response to Hardy's bankruptcy petition, IRS filed a proof of claim for $11,640.99, which was paid in full over the lifetime of the bankruptcy plan pursuant to the order of confirmation dated April 15, 1985. After completion of the plan, Hardy received a discharge of his debts on April 5, 1991.

After receiving a copy of the discharge, IRS sent Hardy a letter requesting payment of $4,109.31 for the tax period ending December 1984. This amount represented pre-petition, discharged tax liability. Hardy's bankruptcy attorney, John Wills, sent a letter to IRS, notifying them of the discharge in bankruptcy.

On July 9, 1992, IRS levied on Hardy's bank account. Mr. Wills sent another letter on July 14, 1992, to the attention of the levy officer, Agent W. Roberts, notifying Agent Roberts and IRS of the discharge in bankruptcy. Agent Roberts visited Mr. Hardy's home on August 7, 1992, and coerced Mr. Hardy into signing a blank check made payable to IRS. Agent Roberts then filled in the amount of $3,465.61, the amount he contended that Hardy owed IRS, and then indicated that Mr. Hardy's account was settled.

Despite Agent Roberts' assurances that Mr. Hardy's account was clear, on January 16, 1993, Mr. Hardy received a Notice of Levy for the tax period ending December 1984 in the amount of $2,902.41.

Proceedings Below

Mr. Hardy's Chapter 13 case was closed on April 11, 1991. On February 16, 1993, Mr. Hardy filed a motion to reopen his Chapter 13 case pursuant to 11 U.S.C. § 350(b) in order to file an adversary proceeding against IRS for alleged violations of the discharge order. The motion was granted on February 25, 1993. On March 18, Mr. Hardy filed a complaint with the bankruptcy court against IRS, requesting sanctions for contempt under 11 U.S.C. § 105 for alleged violations of the discharge injunction of § 524, seeking actual damages, punitive damages, costs and attorney fees.

The bankruptcy court dismissed Hardy's claim for lack of subject matter jurisdiction, relying on former bankruptcy code section 11 U.S.C. § 106 which delineates the waiver of sovereign immunity in bankruptcy cases and finding that the doctrine of sovereign immunity barred the imposition of monetary damages in this case where sovereign immunity was not unequivocally waived. Hardy v. United States (In re Hardy), 161 B.R. 320, 325 (Bankr.S.D.Ga.1993).

Hardy appealed the dismissal of his case by the bankruptcy court to the United States District Court for the Southern District of Georgia. Hardy v. United States (In re Hardy), 171 B.R. 912 (S.D.Ga.1994). After reviewing the appropriate bankruptcy provisions and case law, the district court reluctantly affirmed the bankruptcy's court's dismissal of the case for lack of subject matter jurisdiction. Id. at 916.

On October 22, 1994, President Clinton signed the Bankruptcy Reform Act of 1994 ("Act"), which contained amendments to § 106 that specifically and unequivocally waive sovereign immunity for governmental units for numerous sections of the bankruptcy

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code, including §§ 105, 106, and 524. Bankruptcy Reform Act of 1994, Pub.L. 103-394, § 113, 108 Stat. 4106, 4117 (1994). The waiver of sovereign immunity applies to cases before, on, or after the date of enactment of the Act. Bankruptcy Reform Act of 1994, Pub.L. 103-394, § 702(b)(2)(B), 108 Stat. 4150 (1994).

Jurisdiction and Standard of Review

Under 28 U.S.C. § 158(d), this court has jurisdiction to hear all final orders from a district court that exercised appellate jurisdiction over bankruptcy court orders. 28 U.S.C. § 158(d) (1993).

This court exercises complete and independent review over conclusions of law made by both the bankruptcy court and district court. Glatter v. Mroz (In re Mroz), 65 F.3d 1567, 1570 (11th Cir.1995); B.F. Goodrich Employees Federal Credit Union v. Patterson (In re Patterson), 967 F.2d 505, 508 (11th Cir.1992); Equitable Life Assurance Society v. Sublett (In re Sublett), 895 F.2d 1381, 1383 (11th Cir.1990).

Sovereign Immunity

The doctrine of sovereign immunity prohibits suits against the United States unless the United States specifically consents to be sued. In order to be effective, "[w]aivers of the Governments' sovereign immunity ... must be unequivocally expressed ... [and] are not generally to be liberally construed." United States v. Nordic Village, Inc., 503 U.S. 30, 33-34, 112 S.Ct. 1011, 1014, 117 L.Ed.2d 181 (1992).

Such an unequivocal waiver is now contained in revised section 106 of the bankruptcy code for specifically enumerated bankruptcy provisions. Section 106 provides, in pertinent part:

(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section with respect to the following:

(1) Sections 105, 106, ... 524 ... of this title.

(2) The court may hear an determine any issue arising with respect to the application of such sections to governmental units.

(3) The court may issue against a governmental unit an order, process, or judgment under such sections or the Federal Rules of Bankruptcy Procedure, including an order or judgment...