In Florida Department of Revenue v. Omine, No. 06-11655 (11th Cir. May 11, 2007), the Florida Department of Revenue violated the automatic stay numerous times, including after the Bankruptcy Court had already sanctioned them for prior violations. The DOR argued that sovereign immunity precluded the relief requested by the debtor, which included attorneys fees, costs and damages. The debtor, based on the United States Supreme Court’s decision in Central Virginia Community College v. Katz, disagreed.
The Eleventh Circuit, overruling prior precedent, held that sovereign immunity did not apply —
[W]e agree with the district court that, pursuant to Katz, actions to force a creditor to honor the automatic stay are the types of “proceedings necessary to effectuate the in rem jurisdiction of the bankruptcy court[],” and that, therefore, the Florida DOR may not assert sovereign immunity here. See 546 U.S. at ___, 126 S. Ct. at 1005. And while the Florida DOR insists that the Katz decision should be read narrowly, the Court’s broad language makes clear that “the jurisdiction of courts adjudicating rights in the bankrupt estate include[s] the power to issue compulsory orders to facilitate the administration and distribution of the res.” Id. at ___, 126 S. Ct. at 996. In fact, in holding that the States could not assert their sovereign immunity to defeat preference recovery proceedings, the Court in Katz did not limit its decision by singling out any other specific types of ancillary bankruptcy proceedings that remain subject to the States’ Eleventh Amendment immunity. We hold that the bankruptcy court’s ancillary order to enforce an automatic stay, which is one of the fundamental debtor protections provided by the bankruptcy laws, operates free and clear of the Florida DOR’s claim of sovereign immunity.
It is well settled that a panel of this court may depart from circuit precedent based on an intervening opinion of the Supreme Court that undermines the prior precedent. United States v. Dennis, 786 F.2d 1029, 1049 (11th Cir. 1986). As a result of the Supreme Court’s opinion in Katz, it is necessary to point out that our pre-Katz reasoning of In re Crow, 394 F.3d at 922, invalidating § 106(a), in part, on the basis that Congress may not abrogate state sovereign immunity by legislation passed pursuant to its Article I powers, is no longer good law. See 546 U.S. at ___, 126 S. Ct. at 996 (acknowledging that statements in Seminole Tribe of
Florida v. Florida, 517 U.S. 44, 72, 116 S. Ct. 1114, 1132 (1996), reflected an erroneous assumption that its holding that “Article I cannot be used to circumvent the constitutional limitations placed upon federal jurisdiction,” would apply to the Bankruptcy Clause).Moreover, as we shall discuss, even without Katz’s pronouncement regarding state abrogation of sovereign immunity under the Bankruptcy Clause, the Florida DOR filed a proof of claim in this case, which raises issues of waiver of sovereign immunity
The Court also found that the damages were limited by the application of 11 U.S.C. § 106 –
We agree with the Florida DOR that based on the plain text of 11 U.S.C. § 106(a)(3), the award limitations found in § 106(a)(3) are applicable in this case. Section 106(a)(3) clearly states that “[t]he court may issue against a governmental unit an order . . . under such sections.” The phrase “such sections” in § 106(a)(3) unambiguously refers to the list of sections in § 106(a)(1), which includes an order pursuant to § 362, the section that addresses the automatic stay, and § 105, the section that addresses the power of the court to issue orders necessary to carry out the provisions of the Bankruptcy Code. A plain reading of § 106(a)(3) requires that “such order or judgment for costs or fees under this title” shall be consistent with the provisions and limitations of 28 U.S.C. § 2412(d)(2)(A) and may not include an award of punitive damages.