Federal Deposit Insurance v. AmFin Financial Corp.
757 F.3d 530
6th Cir.2014Background
- AFC, as parent of an Affiliated Group including AmTrust Bank, filed a consolidated 2008 tax return showing $805M NOL, with AmTrust’s losses accounting for $767M.
- The IRS issued a $194,831,455 refund to AFC, deposited in a segregated account per stipulation of the parties.
- AFC asserted any refund belongs to its bankruptcy estate; AmTrust’s FDIC receivership argued the refund was AmTrust’s.
- A TSA was executed to allocate tax liability among group members, but did not expressly address ownership of refunds.
- The district court held the TSA unambiguously allocated the Refund to AFC’s estate and rejected extrinsic evidence of agency/trust under Ohio law.
- The Sixth Circuit reversed, remanding to consider extrinsic evidence and determine ownership under Ohio agency/trust concepts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TSA unambiguously assigns refunds to AFC. | AFC: TSA allocates liability and requires settlements; ownership unclear but text supports AFC. | FDIC: TSA silent on ownership; terms like reimbursement indicate debtor-creditor relationship. | TSA is ambiguous on ownership; not dispositive; extrinsic evidence allowed. |
| Whether federal common law (Bob Richards) applies to determine ownership. | AFC claims no trust/agency should be found; extrinsic evidence improper. | FDIC seeks consideration of extrinsic evidence showing trust or agency. | Extrinsic evidence admissible; may establish resulting trust or agency that allocates Refund to AmTrust. |
| What is the proper framework to resolve ownership when TSA is ambiguous under Ohio law. | Follow Bob Richards protocol to apply state law first, then federal if needed. | Agree to consider state law implications; ultimately state law governs ownership absent explicit agreement. | Protocol supported; ownership to be determined by state-law intent (agency/trust) on remand. |
Key Cases Cited
- In re BankUnited Financial Corp., 727 F.3d 1100 (11th Cir.2013) (tax refund ownership in TSA context; held against automatic debtor-creditor assumption)
- In re NetBank, Inc., 729 F.3d 1344 (11th Cir.2013) (state-law contract analysis governs ownership; TSA intent controls)
- In re Bob Richards Chrysler-Plymouth Corp., 473 F.2d 262 (9th Cir.1973) (establishes rule that absent differing agreement, refunds belong to the contributing member under state law)
- Capital Bancshares, Inc. v. FDIC, 957 F.2d 203 (5th Cir.1992) (followed Bob Richards approach; refunds default to the benefiting member absent contrary agreement)
- In re Prudential Lines Inc., 928 F.2d 565 (2d Cir.1991) (addressed allocation of losses/refunds in consolidated groups; orientation to state-law agreements)
- In re Imperial Capital Bancorp, Inc., 492 B.R. 25 (Bankr.S.D.Cal.2013) ( TSA interpretations on refunds in bankruptcy context)