X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:As a licensed bail bondsman, Geraldine Soileau served as surety on bail bonds for numerous criminal defendants in Texas. Over time, 55 of these defendants absconded while out on bail. The state sued Soileau as those defendants’ surety and obtained state court money judgments against her. In April 2004, Soileau filed a petition under Chapter 7 of the Bankruptcy Code, in which she sought to discharge a total of $650,897.71 in such judgments. Two weeks later, the state moved to dismiss on sovereign immunity grounds, claiming that its refusal to consent to being made a party to the bankruptcy proceedings deprived the bankruptcy court of jurisdiction over it. Shortly thereafter, the bankruptcy court denied the state’s motion, relying on the U.S. Supreme Court’s 2006 opinion Central Virginia Community College v. Katz, its 2004 opinion Tennessee Student Assistance Corp. v. Hood and the 5th Circuit’s pre-Hood and pre-Katz opinions. The state appealed to the district court, but it affirmed the bankruptcy court. The state then timely filed a notice of appeal to the 5th U.S. Circuit Court of Appeals. HOLDING:Affirmed. The state of Texas, the court stated, sought to avoid the discharge through bankruptcy of judgments rendered in state court against Soileau as the statutory surety on bail bonds that she wrote under Texas’ scheme for the release of criminal defendants pending future appearances. Having earlier failed to avoid this precise kind of discharge on nonconstitutional grounds of statutory interpretation of the Bankruptcy Code, the court stated that Texas attempted to take a second bite at the apple by basing its efforts to avoid discharge solely on the constitutional ground of 11th Amendment sovereign immunity. Under the 11th Amendment, the court stated, an unconsenting state is immune from suits by its own citizens. Despite this general prohibition of suits against a nonconsenting or nonwaiving state, the court stated that states may still be bound by some judicial actions without their consent. Applying Hood and Katz to Soileau’s case, the court concluded that the state of Texas had no claim to sovereign immunity. “Whatever uncertainty there may be as to the outer limits of the holdings of Katz and Hood,” the court stated, “at the very least they together establish beyond cavil that an in rem bankruptcy proceeding brought merely to obtain the discharge a debt or debts by determining the rights of various creditors in a debtor’s estate � such as is brought here � in no way infringes the sovereignty of a state as a creditor.” OPINION:Wiener, J.; Wiener and Prado, J.J. CONCURRENCE:Jones, C.J. “I concur in the judgment only. With due respect to the majority, Hood and Katz may dispose of any Eleventh Amendment sovereign immunity claim that Texas could raise here, but those cases do not resolve whether the Bankruptcy Code in fact authorizes the discharge of Soileau’s defaulted bail bonds. Currently, this court’s precedent equates default on bail bonds with any other contractual obligation and holds such debts dischargeable. . . . The State has consistently argued, however, and I agree that Hickman was wrongly decided. While this panel is bound to apply [The 5th Circuit's 2001 opinion Hickman v. State of Texas] and reject the State’s nondischargeability claim, I urge the court to rehear this case en banc and overturn Hickman.”

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.