459 B.R. 416
9th Cir. BAP2011Background
- Wilshire Courtyard transitioned from California general partnership to a Delaware LLC as part of a reorganization plan with Bank of America acquiring Continental, the prior lender.
- The plan provided for a new $100 million nonrecourse loan secured by the Property and allocated 99% ownership to BA, 1% to Wilshire Partners, plus cash and a loan to the partners.
- CFTB was not served with plan documents or notified of the confirmation hearing, though it received later notices of the confirmation order.
- After plan confirmation in 1998, Wilshire Partners reported CODI on their California returns; CFTB later asserted $231 million in capital gains rather than CODI.
- Beginning in 2002, CFTB conducted administrative audits and issued notices of tax assessment totaling about $13 million against the Wilshire Partners.
- In 2009 Wilshire reopened the bankruptcy case and sought enforcement of the confirmation order against CFTB, alleging CFTB collaterally attacked the plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bankruptcy court had subject matter jurisdiction. | CFTB contends no arising-under, arising-in, related-to, or ancillary jurisdiction. | Wilshire/Partners contend post-confirmation nexus and ancillary authority exist to enforce plan terms. | Bankruptcy court lacked subject matter jurisdiction. |
Key Cases Cited
- In re Pegasus Gold Corp., 394 F.3d 1189 (9th Cir. 2005) (close nexus post-confirmation jurisdiction limits)
- In re Resorts Int'l, Inc., 372 F.3d 154 (3d Cir. 2004) (close nexus test for post-confirmation jurisdiction)
- In re Ray, 624 F.3d 1124 (9th Cir. 2010) (post-confirmation jurisdiction limits when claims affect estate)
- Sea Hawk Seafoods, Inc. v. State of Alaska (In re Valdez Fisheries Dev. Ass'n, Inc.), 439 F.3d 545 (9th Cir. 2006) (close nexus analysis for post-confirmation claims)
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (defining related-to jurisdiction framework)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2011) (bankruptcy court interpret/enforce own orders; ancillary authority context)
- Cal. Franchise Tax Bd. v. Alcan Aluminium Ltd., 493 U.S. 331 (1990) (speedy remedy for tax disputes under state law)
- Local Loan Co. v. Hunt, 292 U.S. 234 (1934) (ancillary jurisdiction authority to preserve fruits of judgment)