Furr v. United States Department of Treasury Internal Revenue Service (In Re Pharmacy Distributor Services, Inc.)
455 B.R. 817
Bankr. S.D. Florida2011Background
- Debtor Pharmacy Distributor Services, Inc. filed a voluntary chapter 11 petition on November 13, 2008 and converted to chapter 7 on April 13, 2010, appointing a trustee.
- On March 29, 2011, the Trustee filed an adversary proceeding to avoid fraudulent transfers under 11 U.S.C. § 544 and FUFTA, seeking recovery against the United States for a single tax payment by the Debtor on behalf of its principals.
- The United States moved to dismiss, arguing lack of sovereign immunity waiver for FUFTA-based claims and timeliness issues, including § 546 time limits.
- The court held that § 106 waives sovereign immunity for § 544 actions and there is no requirement of a separate waiver for the underlying state law theory.
- The court rejected the Florida Voluntary Payment Rule as a bar to the trustee’s claims, distinguishing federal refund rights and the trustee’s standing to recover for the estate.
- The court determined the action was timely under § 546 because the state-law limitations had not expired when the bankruptcy case commenced and the filing occurred within § 546(a)(1)’s extended period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §106 waives immunity for FUFTA-based §544 actions | Trustee argues §106 waives immunity for §544 actions using FUFTA. | United States contends no separate waiver exists for FUFTA under §544. | Yes; §106 waives immunity for §544 actions including FUFTA-based theories. |
| Whether Florida's Voluntary Payment Rule bars the trustee's claims | Trustee claims VPR does not apply to federal taxes and to estate claims, not refunds. | United States argues VPR bars refund-like claims for voluntarily paid Florida taxes. | No; VPR does not bar these §544/§550 claims. |
| Whether the action is timely under §546 | Section 546 extends time for avoidance actions when state-law limits have not expired at filing. | Argues §546 does not extend limitations for the underlying state law claim. | Yes; action timely under §546 as state limitations had not expired and filing occurred within the extended period. |
Key Cases Cited
- In re Equip. Acquisition Res., Inc., 451 B.R. 454 (Bankr. N.D. Ill. 2011) (supports broad waiver of sovereign immunity for §544 actions)
- In re Custom Contractors, LLC, 439 B.R. 544 (Bankr. S.D. Fla. 2010) (criticizes Maryland voluntary payment rule application to federal taxes)
- In re C.F. Foods, L.P., 265 B.R. 71 (Bankr. E.D. Pa. 2001) (federal/refund concepts; avoids mistaken application of state refund doctrine)
- Liebersohn v. IRS, 265 B.R. 71 (Bankr. E.D. Pa. 2001) (addresses federal voluntary payment doctrine distinctions)