Wolff v. Schaefer

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: :
:
FIRSTPAY, INC. : Case No. 03-30102PM
: Chapter 7
Debtor :
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - :
MICHAEL G. WOLFF, TRUSTEE :
Plaintiff :
vs. : Adversary No. 04-1222PM
:
WILLIAM DONALD SCHAEFER :
in his capacity as :
Maryland State Comptroller :
Defendant :
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - :
MEMORANDUM OF DECISION
This court heard the arguments of the parties on the Defendant’s motion to dismiss this
case. After the court prepared its Memorandum of Decision and Order Dismissing this adversary
proceeding, the United States Supreme Court issued its opinion in the case of Tennessee Student
Assistance Corporation v. Hood, ___ U.S. ___, 124 S.Ct. 1905 (2004). Following the issuance
of the Hood decision, Plaintiff filed a motion for reconsideration that this court denied by Order
entered June 10, 2004. That same date the court issued a Memorandum to Counsel requesting
counsel to submit memoranda, should they wish to do so, commenting on the Hood decision.
The court has carefully studied the memoranda submitted by the parties. In particular, the
court notes the opening paragraph of the Opinion of the court that limited the decision to the
determination that a complaint seeking the dischargeability of a student loan debt is not a suit
Date signed July 21, 2004
Case 04-01222 Doc 23 Filed 07/22/04 Page 1 of 2

against the State for the purposes of the Eleventh Amendment. The court noted that the
discharge of a debt by a Bankruptcy Court is an in rem proceeding, citing Gardner v. New Jersey,
329 U.S. 565, 574 (1947).
The court went on to point out that the exercise of in rem jurisdiction to discharge a debt
does not infringe State sovereignty. Plaintiff urges that this is an in rem action inasmuch as what
Plaintiff seeks is the return of property of the estate paid to the State of Maryland after the filing
of this involuntary petition against the Debtor. Here, unlike Hood, this Plaintiff seeks monetary
damages against the State of Maryland. The court finds no reason to label this case as one in rem
simply because it seeks a judgment on account of property transferred from the estate. The court
will therefore reaffirm its earlier Order.
An appropriate order will be entered.
cc:
Michael G. Wolff, Esq., 11300 Rockville Pike, Suite 408, Rockville, MD 20852
Jeffrey M. Orenstein, Esq., 11300 Rockville Pike, Suite 408, Rockville, MD 20852
Maryland State Comptroller, c/o Sylvia J. Brokos, Esq.,
Compliance Division, Room 410, 301 W. Preston Street, Baltimore, MD 21201
United States Trustee, 6305 Ivy Lane, #600, Greenbelt MD 20770
End of Memorandum
Case 04-01222 Doc 23 Filed 07/22/04 Page 2 of 2