In Re Kizzee-Jordan
626 F.3d 239
| 5th Cir. | 2010Background
- Thompsons owed ad valorem taxes for 2006–2007 to Humble ISD, Harris County, and Harris County MUD.
- In February 2008 they borrowed from Tax Ease Funding, which paid the taxes under Texas law and received a transfer of the taxing authorities’ tax liens.
- Thompsons signed a promissory note for $11,600.11 repayable over 10 years at 14.8% interest; Tax Ease became the transferee and subrogee of the tax lien.
- April 2009 Thompsons filed Chapter 13; plan proposed 5% interest to Tax Ease; Tax Ease objected that § 511 tax claims require nonbankruptcy-law rates.
- Bankruptcy court concluded Tax Ease’s claim was extinguished with tax payment and the lien transfer created a new note; district court later held Tax Ease held a tax claim under § 511; this court affirmed.
- Procedural posture focused on whether Tax Ease’s interest rate was governed by nonbankruptcy law as a tax claim under § 511.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tax Ease holds a tax claim under § 511. | Kizzee-Jordan argues Tax Ease holds a tax lien, not a tax claim. | Thompsons argue Tax Ease holds a new non-tax debt secured by a lien. | Tax Ease holds a tax claim protected by § 511. |
Key Cases Cited
- In re Davis, 352 B.R. 651 (Bankr. N.D. Tex. 2006) (holds third-party tax purchasers may have tax claims under § 511)
- In re Cortner, 400 B.R. 608 (Bankr. S.D. Ohio 2009) (third-party tax purchaser may possess a tax claim under § 511 under Ohio law)
- In re Princeton Office Park, L.P., 423 B.R. 795 (Bankr. D. N.J. 2010) (tax sale certificate holder possession of a tax claim varies by state law)
- Johnson v. Home State Bank, 501 U.S. 78 (1991) (lienholders retain rights to payment despite discharge of debtor’s personal obligation)
- In re Bartee, 212 F.3d 277 (5th Cir. 2000) (finality standard for bankruptcy appeals)
- In re England, 975 F.2d 1168 (5th Cir. 1992) (finality and appealability in bankruptcy)