In Re BankUnited Financial Corp. v. FDIC
727 F.3d 1100
11th Cir.2013Background
- BankUnited Financial Corporation (Holding Company) was common parent of a consolidated group; BankUnited FSB (Bank) was principal operating subsidiary.
- A 1997 Tax Sharing Agreement (TSA) governed allocation of consolidated tax payments, inter-company receivables/payables, and required the Bank to pay taxes and reimburse or distribute refunds to members within 30 days of filing.
- IRS refund checks for tax years 2007 and 2008 were issued in the Holding Company’s name and delivered to it; Holding Company retained the refunds and filed Chapter 11 the day after the Bank failed and FDIC was appointed receiver.
- FDIC, as receiver for the Bank, claimed entitlement to the refunds under the TSA and filed a claim in the bankruptcy; parties agreed refunds be held in escrow pending resolution.
- Bankruptcy Court ruled the refunds were property of the Holding Company’s bankruptcy estate (creating an unsecured claim for the Bank/FDIC); Holding Company appealed.
- Court of Appeals held the TSA intended the Holding Company to hold refunds in trust/escrow for distribution and reversed, directing escrowed funds be delivered to FDIC for distribution under the TSA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tax refunds received by the common parent are property of the bankruptcy estate or held for the Bank/Group under the TSA | Holding Co.: refunds received in its name are estate property; any rights of Bank are unsecured creditor claims | FDIC/Bank: TSA requires Holding Co. to forward refunds to Bank for allocation; refunds held for benefit of Group, not estate | Court: Refunds are not estate property; Holding Co. held funds in escrow/for the Bank and must forward to FDIC for distribution under TSA |
| Whether bankruptcy court lacked jurisdiction because refunds are FDIC receivership assets (12 U.S.C. §1821 issues) | Holding Co.: bankruptcy court may decide whether funds are estate property before receivership-asset determination | FDIC: federal statute limits judicial review of receivership assets to district courts, precluding bankruptcy court adjudication | Court: §1821(d)(13)(D) applies to receivership assets only; bankruptcy court could determine threshold whether refunds were estate property; here refunds were not estate assets, so returned to FDIC |
Key Cases Cited
- Rohner v. Niemann, 380 A.2d 549 (Del. 1977) (Delaware contract interpretation focuses on parties’ intent and surrounding circumstances)
- In re Rob Richards Chrysler-Plymouth Corp., 473 F.2d 262 (9th Cir.) (agency role of parent in filing consolidated returns is procedural and does not determine inter-company entitlement to refunds)
- In re First Cent. Fin. Corp., 269 B.R. 481 (Bankr. E.D.N.Y.) (parent acts as agent for consolidated group for IRS purposes; agency is procedural and does not by itself allocate refund entitlements)