BankUnited Financial Corp. v. Federal Deposit Insurance (In Re BankUnited Financial Corp.)
462 B.R. 885
Bankr. S.D. Florida2011Background
- BUFC and BUFS entered into an Income Tax Allocation Agreement (TAA) in 1997 for the BU consolidated group, under which the Bank paid taxes for the group and members reimbursed the Bank for net tax payables and received/held refunds as applicable.
- BUFB was closed May 21, 2009; the FDIC-R was appointed as Receiver; BUFC and other BankUnited debtors filed Chapter 11 petitions on May 22, 2009.
- BUFC filed amended returns and Form 1139 refunds for FY 2007 and FY 2008 refunds tied to earlier years; FDIC-R filed proofs of claim asserting ownership of the Tax Refunds.
- Plaintiffs objected to the FDIC-R’s claim, seeking a declaration that the Holding Company owns the Tax Refunds and other relief; settlement negotiations addressed ownership pending this dispute.
- The district court addressed withdrawal of the reference and core/non-core jurisdiction issues post Stern v. Marshall, with Judge Huck’s and this court’s jurisdiction limited to core proceedings arising in or from the bankruptcy case.
- The court must now determine ownership of the Tax Refunds under 11 U.S.C. §541 and the nature of the Holding Company’s interest, considering the TAA and applicable state law principles.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tax Refunds are property of the Holding Company’s estate | Holding Company owns the refunds as general property | FDIC-R holds refunds as agent/trust for the Bank and group | Tax Refunds are property of the Holding Company. |
| Whether the dispute falls within core jurisdiction after Stern | Core jurisdiction exists because it arises from the bankruptcy and affects the estate | Issue is non-core or not essential to claims process | Court has core jurisdiction and may enter final judgment. |
| Whether the TAA creates an express or implied agency/trust over refunds | TAA implies inter-company debts/receivables; Holding Company holds refunds as its property | TAA does not create a trust; Bank is the owner/recipient of refunds | No express or implied trust; refunds belong to Holding Company as property of the estate. |
| Application of Bob Richards and related authorities to allocation of refunds | Bob Richards presumption applies when no express agreement exists | Bob Richards is superseded by Franklin Savings and Delaware law; no trust implied | Bob Richards does not control; absence of express/implied agreement resolves ownership in favor of Holding Company. |
Key Cases Cited
- Bob Richards Chrysler-Plymouth Corp., Inc. v. Western Dealer Mgmt., Inc., 473 F.2d 262 (9th Cir. 1973) (tax refund held as fiduciary trust where agency creates trust absent agreement)
- In re Marvel Entertainment Group, Inc., 273 B.R. 58 (D. Del. 2002) (allocation agreements govern ownership rights within consolidated groups)
- Franklin Savings Corp. v. Franklin Savings Assoc., 159 B.R. 9 (Bankr. D. Kan. 1993) (agency vs. ownership based on tax reimbursement agreements)
- Ochs (In re First Central Fin. Corp.), 377 F.3d 209 (2d Cir. 2004) (constructive trust not imposed absent fraud; agency not inferred from agreement)
- Jump v. Manchester Life & Casualty Management Corp., 579 F.2d 452 (5th Cir. 1978) (allocation rights in consolidated groups governed by agreements)
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (defines core proceedings and limits bankruptcy court’s final-judgment authority)