Green v. Federal Deposit Insurance (In Re Tamalpais Bancorp)
451 B.R. 6
N.D. Cal.2011Background
- On April 16, 2010 the California Department of Financial Institutions closed Tamalpais Bank and appointed FDIC as receiver.
- On September 24, 2010 Debtor Tamalpais Bancorp filed a Chapter 7 bankruptcy; Linda S. Green was appointed trustee for the estate.
- Trustee filed an adversary complaint on November 30, 2010 in bankruptcy court seeking a declaratory judgment about ownership of certain tax Refunds.
- From 1997 to 2009 Debtor filed consolidated tax returns on behalf of Debtor, Bank, and another subsidiary; changes in 2009 allowed FDIC to amend Bank’s tax return and obtain $9.7 million in Refunds.
- Trustee claims the Refunds belong to Debtor’s bankruptcy estate under a 2005 Tax Sharing Agreement; FDIC contends ownership is governed by federal non-bankruptcy law and seeks withdrawal of the reference.
- FDIC moves to withdraw the reference to the bankruptcy court under 28 U.S.C. § 157(d) on either mandatory or permissive grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is mandatory withdrawal warranted when non-title 11 issues are present? | FDIC asserts mandatory withdrawal due to FIRREA and non-title 11 defenses. | FDIC argues novel non-bankruptcy issues require district court resolution. | Mandatory withdrawal not warranted; no novel non-bankruptcy issues shown. |
| Do FDIC’s asserted non-bankruptcy defenses create novel issues requiring withdrawal? | FDIC claims seven federal non-bankruptcy defenses necessitate withdrawal. | Defenses rely on existing law and do not require interpretation of unsettled non-title 11 statutes. | No particular defense requires interpretation of unsettled non-title 11 law; withdrawal not mandatory. |
| Is the Trustee's claim core or non-core under § 157(b)/(d) and related standards? | Trustee’s claim determines property of the bankruptcy estate under § 541(a), a core issue per Kincaid. | Claim is a contract-based ownership dispute, a non-core proceeding under Sec. Farms. | Trustee's claim is non-core; it does not depend on bankruptcy law for its existence. |
| Is permissive withdrawal appropriate under Sec. Farms factors? | Federal bankruptcy issues intertwined with non-bankruptcy law justify withdrawal for efficiency. | Proceedings could proceed in district court with efficient handling of related issues. | Permissive withdrawal is appropriate; efficiency and avoidance of duplicative review favor withdrawing the reference. |
Key Cases Cited
- In re Harris, 590 F.3d 730 (9th Cir. 2009) (core/non-core distinction guiding withdrawal)
- In re Ray, 624 F.3d 1124 (9th Cir. 2010) (non-core contract-based issues in bankruptcy context)
- Sec. Farms v. Int'l Bhd. of Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999 (9th Cir. 1997) (factors for permissive withdrawal and efficiency)
- In re Castlerock Props., 781 F.2d 159 (9th Cir. 1986) (avoidance of core/non-core misclassification; constitutional concerns)
- Vicars Ins. Agency, Inc., 96 F.3d 949 (7th Cir. 1996) (mandatory withdrawal requires novel non-title 11 issues)
- In re Ionosphere Clubs, Inc., 922 F.2d 984 (2d Cir. 1990) (interpretation vs. application of non-title 11 statute standard)
- In re Kincaid, 917 F.2d 1162 (9th Cir. 1990) (distinguishing core vs. non-core issues under § 541 context)