Circuit Judge Neil M. Gorsuch, nominated by the President for the open seat on the Supreme Court, will bring uncommonly fine writing talents to the high court, assuming he survives opposition from Democrats. In his bankruptcy opinions for the Tenth Circuit, Judge Gorsuch has demonstrated a willingness to criticize Supreme Court authority while following the Court’s mandates and the plain language of statutes.
During his tenure on the Tenth Circuit, which began in 2006 upon appointment by President George W. Bush, Judge Gorsuch sat on about 80 panels touching on bankruptcy. His most revealing insolvency opinion was Woolsey v. Citibank NA (In re Woolsey), 696 F.3d 1266 (10th Cir. 2012), where the chapter 13 debtor brought a test case attempting to strip off an underwater subordinate mortgage relying entirely on Section 506, not Section 1322(b)(2).
In substance, the debtor wanted the Tenth Circuit to apply the Supreme Court’s 1993 decision in Dewsnup v. Timm only to chapter 7 cases and thus rule that Section 506(d) has one meaning in chapter 7 and another in chapter 13. Dewsnup was a good target for narrow reading because the opinion has been roundly criticized by scholars and had drawn a vigorous dissent from Justice Antonin Scalia, who accused the majority of ignoring the plain language of Section 506.
Judge Gorsuch declined the invitation to read Dewsnup too narrowly, although he was politely but directly critical of the decision. He said the Supreme Court “may have warped the Bankruptcy Code’s seemingly straight path into a crooked one. But until and unless the Court chooses to revisit it, it is final.”
In his opinion in Woolsey, Judge Gorsuch presaged the Supreme Court’s own decision three years later in Bank of America v. Caulkett, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (Sup. Ct. 2015). In Caulkett, Justice Clarence Thomas said that a “straightforward reading” of the statute would allow a chapter 7 debtor “to void the bank’s liens,” thereby allowing lien-stripping in chapter 7. Although a majority of the justices might have been primed to overrule Dewsnup, they did not because the debtor did not ask them to.
Four years before Woolsey, Judge Gorsuch said he was “not inclined to extend Dewsnup well outside the statutory context in which it was decided.” Morris v. St. John National Bank (In re Haberman), 516 F.3d 1207, 1213 (10th Cir. 2008). In Haberman, Judge Gorsuch held that a trustee does not assume all the rights of a secured creditor when an unperfected lien is avoided. In that respect, Judge Gorsuch lined himself up with the Collier treatise, basing his opinion on the interaction of words in the statute rather than the result Congress might have preferred if legislators had focused on the issue.
Where many judicial opinions tend to be dry and sleep-inducing, Judge Gorsuch writes opinions that are lively, engaging and erudite. An example is U.S. v. Dawes (In re Dawes), 652 F.3d 1236 (10th Cir. 2011), where Judge Gorsuch began his opinion by saying that the “tax collector bears resemblance to the grim reaper, always hovering, never avoidable.”
When he wrote Loveridge v. Hill (In re Renewable Development Corp.), 792 F.3d 1274 (10th Cir. 2015), we said at the time, “The opinion is worth reading simply to enjoy Judge Gorsuch’s engaging writing style reminiscent of U.S. Circuit Judges Richard Posner and Frank Easterbrook in Chicago.” When he handed down Woolsey, we said then that it was “an erudite and engaging 30-page opinion.”
In Dawes, Judge Gorsuch correctly guessed how the Supreme Court would resolve a split of circuits regarding the priority status of capital gains taxes incurred when a chapter 12 debtor sells property after filing. Judge Gorsuch took sides with the Ninth Circuit and differed with the Eighth on the question involving Section 1222(a)(2)(A).
In Hall v. U.S., 132 S. Ct. 1882, 182 L. Ed. 2d 840 (Sup. Ct. 2012), the Supreme Court resolved the split in line with the opinions by Judge Gorsuch and the Ninth Circuit in holding that capital gains taxes are relegated to general unsecured status only from sales that occur before filing. Dissenting in Hall from the 5/4 opinion by Justice Sonia Sotomayor, Justice Stephen G. Breyer said the majority’s result was the “very opposite of what Congress intended” when it amended bankruptcy law in 2005.
Judge Gorusch’s Dawes opinion showed that he is inclined to follow the plain language of a statute when the words used by Congress probably did not accomplish the intended result.
Having clerked for Justice Anthony M. Kennedy, Judge Gorsuch would be the seventh former Supreme Court clerk to sit on the high court. With his law degree from Harvard Law School in 1991, he would be the fifth justice currently sitting on the Court from Harvard.
Judge Gorsuch has sent a dozen former clerks to clerkships on the Supreme Court. Eight went to Justices Samuel A. Alito, Jr., Antonin Scalia and Clarence Thomas. Not all of his former clerks served conservative justices, though: Three worked for Justices Elena Kagan and Sonia Sotomayor, and one clerked for Judge Gorsuch’s old boss, Justice Kennedy.
Had the President instead selected Judge Thomas M. Hardiman for the opening on the high court, the bench would include the author of the Third Circuit’s opinion in Czyzewski v. Jevic Holding Corp., 15-649 (Sup. Ct.), which was argued before the Supreme Court in early December. Given the oral argument in Jevic, it seems that a majority of the justices might be heading toward reversing Judge Hardiman’s ruling and precluding settlements in bankruptcy that result in distributions that contravene the priority scheme in the Bankruptcy Code.