In re Burlington Motor Holdings Inc.
| Decision Date | 08 December 1999 |
| Docket Number | Bankruptcy No. 95-1559 to 95-1563. Adversary No. 98-155. |
| Citation | 242 BR 156 |
| Parties | In re BURLINGTON MOTOR HOLDINGS INC., Burlington Motor Carriers Inc., Spirit Transportation Inc., BNMC Real Estate Inc., and BMC Equipment Inc., Debtors. Burlington Motor Carriers Inc., Plaintiffs, v. Indiana Department of Revenue, Alabama Department of Revenue, Arizona Department of Transportation, Arkansas Department of Finance and Administration, California Department of Motor Vehicles, Colorado Department of Revenue, Connecticut Department of Motor Vehicles, Delaware Division of Motor Vehicles, Florida Department of Highway Safety and Motor Vehicles, Georgia Department of Revenue, Idaho Transportation Department, Illinois Secretary of State — Vehicle Services Department, Iowa Department of Transportation, Kansas Department of Revenue, Kentucky Transportation Cabinet, Louisiana Department of Public Safety & Corrections, Maine Bureau of Motor Vehicles, Maryland Motor Vehicle Administration, Massachusetts Registry of Motor Vehicles, Michigan Department of State, Minnesota Department of Public Safety, Mississippi State Tax Commission, Missouri Highway Reciprocity Commission — Missouri Department of Revenue, Montana Department of Transportation, Nebraska Department of Motor Vehicles, Nevada Registration Division — Department of Motor Vehicles and Public Safety, New Hampshire Department of Safety, New Jersey Department of Motor Vehicles, New Mexico Motor Vehicle Division Taxation and Revenue Department, New York Department of Motor Vehicles, North Carolina Department of Transportation, North Dakota Department of Transportation, Ohio Bureau of Motor of Motor Vehicles, Oklahoma Tax Commission, Oregon Department of Transportation, Pennsylvania Bureau of Motor Vehicles, Rhode Island Division of Motor Vehicles, South Carolina Department of Revenue, South Dakota Department of Revenue, Tennessee Department of Revenue, Texas Department of Transportation, Utah State Tax Commission, Vermont Agency of Transportation, Virginia Department of Motor Vehicles, Washington Department of Licensing, West Virginia Division of Motor Vehicles, Wisconsin Department of Transportation and Wyoming Department of Transportation, Defendants. |
| Court | U.S. Bankruptcy Court — District of Delaware |
Karen C. Bifferato, Connolly, Bove, Lodge & Hutz, Wilmington, DE.
Tobey M. Daluz, Reed Smith Shaw & McClay LLP, Philadelphia, PA.
Before the court is the "Successor Corporation's Motion for Reconsideration of Order Dismissing Adversary Complaint". In its adversary complaint the Successor Corporation sought a refund of alleged overpayments of registration and licensing fees made postpetition by Debtors pursuant to the International Registration Plan ("IRP"). The Successor Corporation challenged the overpayments as avoidable postpetition preferences. It now asks us to reconsider our dismissal of the complaint by Memorandum Opinion and Order dated July 9, 1999 (235 B.R. 741 (Bankr. D.Del.1999)), which was based, inter alia, on the ground that the alleged overpayment of the IRP fee was an ordinary course of business expense and an administrative expense of the estate.2
The Successor Corporation cites Harsco Corp. v. Zlotnicki, 779 F.2d 906 (3d Cir.1985), cert. denied 476 U.S. 1171, 106 S.Ct. 2895, 90 L.Ed.2d 982 (1986), for the proposition that a motion for reconsideration is to correct manifest errors of fact. It asserts that we erred in not considering the fact that the alleged overpayment of the IRP fee failed to benefit the estate and, therefore, cannot be an administrative expense.3 The California DMV responded to the effect that the estate was benefitted. However, the Successor Corporation does not dispute that Debtors had to pay the IRP fee to operate and that operation was essential to reorganization. We find that Debtors could not have operated lawfully postpetition without paying the IRP fee and, inasmuch as the fee permitted operations, the estate was benefitted by payment of the fee. Moreover, we have been pointed to no authority establishing entitlement to a refund of these fees under either state or federal law, and our own examination with respect to the July 1999 decision indicates that the Successor Corporation would not qualify for a refund under the state laws we reviewed.4 The Motion for Reconsideration is denied with respect to this ground.
The Successor Corporation also asks that "if necessary, ... this Court decide the sovereign immunity issue on the current briefs." Motion for Reconsideration at ¶ 10. In an unsigned Joint Response to the Motion for Reconsideration, filed on behalf of approximately 20 states, and separate responses filed on behalf of the Virginia DMV and the New Jersey DMV,5 the states argue that we must decide the "jurisdictional issue" of sovereign immunity and cannot address the merits of the Complaint as we did. It is apparently the states' position that sovereign immunity goes to this court's subject matter jurisdiction and, because they assert sovereign immunity, we have no jurisdiction to adjudicate the matter. Although the states did not file motions for reconsideration, their responses to the Successor Corporation's motion raise the issue of subject matter jurisdiction. Because a court must always examine its own subject matter jurisdiction, we address the issue. See generally, Carlough v. Amchem Products, Inc., 10 F.3d 189, 201 (3d Cir.1993); Atlantic City Mun. Utilities Authority v. Regional Adm'r, 803 F.2d 96, 103 (3d Cir.1986).
For the reasons which follow, we find that sovereign immunity is not a matter of subject matter jurisdiction. Subject matter jurisdiction cannot be waived nor may it be conferred by agreement. Sovereign immunity, on the other hand, can be waived. Sovereign immunity is referred to as an affirmative defense in many Supreme Court decisions, although, except for Gardner v. State of New Jersey, 329 U.S. 565, 67 S.Ct. 467, 91 L.Ed. 504 (1947), reh. denied 330 U.S. 853, 67 S.Ct. 768, 91 L.Ed. 1296 (1947), none that we examined are bankruptcy cases.6See also Ford Motor Co. v. Dept. of Treasury of State of Indiana, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945) (); citing State of Missouri v. Fiske, 290 U.S. 18, 24, 54 S.Ct. 18, 78 L.Ed. 145 (1933); Gunter v. Atlantic Coast Line R. Co., 200 U.S. 273, 26 S.Ct. 252, 50 L.Ed. 477 (1906); Clark v. Barnard, 108 U.S. 436, 447, 2 S.Ct. 878, 27 L.Ed. 780 (1883).7See also Alden v. Maine, 527 U.S. 706, 119 S.Ct. 2240, 2258, 144 L.Ed.2d 636 (1999), discussing Hilton v. South Carolina Public Railways Comm'n, 502 U.S. 197, 112 S.Ct. 560, 116 L.Ed.2d 560 (1991) (); Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 493, 103 S.Ct. 1962, 1971 n. 20, 76 L.Ed.2d 81 (1983), rehearing denied, petition for cert. filed 68 USLW 3138 (Aug. 23, 1999) (No. 99-32) (). Cf. U.S. Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 77, 108 S.Ct. 2268, 2271, 101 L.Ed.2d 69 (1988) (). But see Wisconsin Dept. of Corrections v. Schacht, 524 U.S. 381, 391-92, 118 S.Ct. 2047, 2054, 141 L.Ed.2d 364 (1998), wherein the Court noted that it has not decided whether "Eleventh Amendment immunity is a matter of subject matter jurisdiction."8 This seemingly irreconcilable statement, in light of the above cited cases, is explained somewhat by the statement in Calderon v. Ashmus, 523 U.S. 740, 745, n. 2, 118 S.Ct. 1694, 1697 n. 2, 140 L.Ed.2d 970 (1998), rehearing denied 524 U.S. 968, 119 S.Ct. 5, 141 L.Ed.2d 766 (1998), that "While the Eleventh Amendment is jurisdictional in the sense that it is a limitation on the federal court's judicial power, and therefore may be raised at any stage of the proceedings, we have recognized that it is not coextensive with the limitations on judicial power in Article III" (citing Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997)). Even this language tends to support the view that sovereign immunity, if invoked properly, may prevent the exercise of federal jurisdiction but, whether or not exercised, does not deprive the court of its jurisdiction.
We note that In re Sacred Heart Hospital of Norristown, 133 F.3d 237 (3d Cir. 1998), interpreted Seminole Tribe of Florida v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), as holding that, even when the Constitution gives Congress complete law-making authority in a particular area, Congress cannot authorize suits by private parties against unconsenting states under the Eleventh Amendment. Sacred Heart, however, addressed only 11 U.S.C. § 106(a). It did not address the serious, and as yet unanswered, question as to whether states may assert sovereign immunity in bankruptcy cases at all.
In Alden v. Maine the Supreme Court spoke to the Eleventh Amendment:
... the sovereign immunity of the States neither derives from nor is limited by the terms of the Eleventh Amendment. Rather, as the Constitution\'s structure, and its history, and the authoritative interpretations by this Court make clear, the States\' immunity from suit is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution, and which they retain today (either literally or by virtue of their admission into the Union upon an equal footing with the other States) except as altered by the plan of the...
To continue reading
Request your trial