MEMORANDUM OPINION ON ORDER GRANTING SUMMARY JUDGMENT IN FAVOR OF PLAINTIFFS AND DENYING SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS
This matter came before me on September 13, 2011 on cross-motions for summary judgment filed by the Plaintiffs, BankUnit-ed Financial Corporation (“BUFC” or “Holding Company”), BankUnited Financial Services, Incorporated (“BUFS”), CRE America Corporation (“CRE”) (collectively “BankUnited Debtors”) and BU Realty Corporation (“BU Realty” collectively with the BankUnited Debtors, the “Plaintiffs”) and the Cross-Motion for Summary Judgment filed by the Defendant Federal Deposit Insurance Corporation, in its capacity as Receiver (“FDIC-R” or “Defendant”) of BankUnited, FSB (“BUFB” or the “Bank”). 1
FACTUAL AND PROCEDURAL HISTORY
On December 31, 1997, the Holding Company and the Bank entered into an Income Tax Allocation Agreement (“TAA”). The TAA defined the appropriate methods for allocating current and deferred income tax assets and liabilities among the Holding Company, the Bank, and the other members of the Affiliated Group identified in the TAA (the “BU Consolidated Tax Group”).
2
Under the TAA the Bank was to make all tax payments on behalf of the BU Consolidated Tax Group. Any members with net tax payables were then responsible for reim
On May 21, 2009 BUFB was closed by the Office of Thrift Supervision (“OTS”) and the FDIC-R was appointed as Receiver. On May 22, 2009, BUFC and the other BankUnited Debtors filed petitions under Chapter 11 of the Bankruptcy Code.
BUFC filed a consolidated tax return titled “Amended U.S. Corporation Income Tax Return” for the fiscal year ended September 80, 2008 on Form 1120X filed by “BankUnited Financial Corp. & Subs C/O DSI” on or about September 10, 2009 (the “Amended FY 2007 Return”), and a certain consolidated tax return titled “U.S. Corporate Income Tax Return” for the fiscal year ended September 30, 2009 on Form 1120 filed by “BankUnited Financial Corporation and Subsidiaries” on or about June 14, 2010 (the “FY 2008 Return”).
In conjunction with the filing of the Amended FY 2007 Return, on September 30, 2009, BUFC filed a Form 1139 “Corporate Application for Tentative Refund” (“Form 1139”) through which it claimed a refund of $5,566,878 (the “FY 2007 Refund”). In conjunction with the filing of the FY 2008 Return, on June 17, 2010, BUFC filed a Form 1139 through which it claimed a refund of $42,552,226 (the “FY 2008 Refund”) for taxes paid in fiscal years 2003 (fiscal year ending September 30, 2004), 2005 (fiscal year ending September 30, 2006), and 2006 (fiscal year ending September 30, 2007) (the “FY 2008 Refund Claim”), representing the maximum refund available to the BU Consolidated Tax Group.
On or about June 13, 2011, BUFC and the FDIC-R jointly filed an amended return for FY 2008 (the “Amended FY 2008 Return”) pursuant to a Settlement Agreement dated as of June 4, 2011 (the “Settlement Agreement”). The anticipated tax refunds from the Amended FY 2007 Return and the Amended FY 2008 Return will be referred to hereinafter collectively as the “Tax Refunds”.
The FDIC-R filed proofs of claim in each of the BankUnited Debtors’ bankruptcy cases; those proofs of claim include the FDIC-R’s assertion of ownership of the Tax Refunds. 3 The Plaintiffs filed claims in the Bank receivership (the “Receivership Claims”).
On April 21, 2010 the Plaintiffs filed a 22 count complaint (ECF # 1) (the “Complaint”) objecting to the FDIC-R proofs of claim on the grounds that any claim relating to the Tax Refunds are at most an unsecured claim, seeking a declaratory judgment that the Holding Company owns the Tax Refunds, and seeking additional relief under several other counts including a determination that the Receivership Claims were deemed allowed due to the FDIC-R’s alleged untimely objection to the Receivership Claims. The FDIC-R filed a Motion for Withdrawal of the Reference (ECF #11) alleging that considerations of Title 12 mandated the reference be withdrawn. 4
On August 23, 2010, the district court entered its order Granting in Part and
Soon thereafter, the Plaintiffs filed an Amended Complaint (ECF # 67), to which the FDIC-R filed its Answer and Affirmative Defenses (ECF # 73). Subsequently the parties filed their cross-motions for partial summary judgment with respect to Count I and Count II of the Amended Complaint, agreeing that there are no disputed material facts. Count I of the Amended Complaint is the Plaintiffs’ objection to the FDIC-R’s claims; Count II seeks a declaration by this Court that the Tax Refunds are property of the Holding Company, and not of the Bank or the FDIC-R as its receiver.
The adjudication of the cross-motions was delayed for approximately eight months while the parties negotiated the Settlement Agreement pursuant to which all matters between the Plaintiffs and the FDIC-R were resolved other than a portion of Counts I, and Count II, of the Amended Complaint. 8 The Settlement Agreement addresses the disposition of the Tax Refunds and the amount of the FDIC-R’s claims, if any, in the BankUnit-ed Debtors’ bankruptcy cases, based on the outcome of the dispute over ownership of the Tax Refunds. 9
Rule 56 of the Federal Rules of Civil Procedure is applicable to this adversary proceeding under Fed. R. of Bankr.P. 7056. Summary judgment is appropriate where the “pleadings, dispositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c);
Celotex v. Catrett,
JURISDICTION
The Amended Complaint alleges that this Court has jurisdiction pursuant to 12 U.S.C. §§ 1819(b)(2)(A) 11 and 1821(d)(6) 12 and 28 U.S.C. §§ 1331 13 and 1334. 14 Amended Complaint ¶ 6. The Amended Complaint further alleges that the “matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), (C), (E), (F), (H), and (O).” Amended Complaint, ¶ 8. The Answer denies all the jurisdictional allegations of the Amended Complaint.
Sometime between when the Cross Motions for Summary Judgment were filed and the scheduled oral argument on the Motions for Summary Judgment, the United States Supreme Court issued its opinion in
Stern v. Marshall,
— U.S. -,
The FDIC-R’s renewed Title 12 argument stems from Judge Huck’s denial of the vast majority of the motion to withdraw reference, in which Judge Huck observed that the bankruptcy court is an “adjunct” of the district court. In
Stern v. Marshall,
Justice Roberts rejected appellant’s argument that, as an adjunct of the district court, the bankruptcy court can exercise jurisdiction over a matter traditionally within the sole jurisdiction of an Article III tribunal. In noting that the bankruptcy court has the legitimate power to enter final judgments, subject only to a party’s right to appeal, the Chief Justice observed that “a bankruptcy court can no more be deemed a mere ‘adjunct’ of the district court than a district court can be deemed such an ‘adjunct’ of the court of appeals.”
I reject the FDIC-R’s argument for two reasons. First, and most obvious, it is not my place to determine that Judge Huck’s ruling is no longer good law in this case. Judge Huck considered the FDIC-R’s argument that a bankruptcy court can never hear Title 12 matters. Judge Huck rejected that argument, which is before me now, with the limited exception noted in his opinion. To the extent that the premise upon which Judge Huck relied has been altered by Stem, it is not my place to make that decision. That will need to await appellate review. 17
Second, I disagree with the FDIC-R that
Stem
altered Judge Huck’s original ruling. Judge Huck cited many cases, most or all of which post-date the
Marathon
opinion,
18
in which, notwithstanding the statutory and exclusive jurisdiction of Article III tribunals in particular kinds of disputes, such matters are routinely heard by bankruptcy courts.
See, e.g., Browning v. Levy,
I now turn to that holding. In ruling that Congress exceeded its constitutional authority in 28 U.S.C. § 157(b)(2)(C) because “the Bankruptcy Court lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim ... ”,
Nonetheless, the FDIC-R argues that I do not have jurisdiction to hear this claim because (a) determination of what is property of the estate is not a core matter, is not a matter that stems from the bankruptcy, when the property interest can be determined outside bankruptcy and does not involve a substantive bankruptcy right, and (b) Count II is not necessarily resolved as part of the claim objection because there is no more pending claim objection.
As the FDIC-R acknowledges in its Memorandum of Law in Support of Jurisdiction (ECF # 151), 28 U.S.C. § 157(b)(2)
The FDIC-R relies on
Wood v. Wood (In re Wood),
If the proceeding involves a right created by the federal bankruptcy law, it is a core proceeding; for example, an action by the trustee to avoid a preference. If the proceeding is one that would arise only in bankruptcy, it is also a core proceeding; for example, the filing of a proof of claim or an objection to the discharge of a particular debt. If the proceeding does not invoke a substantive right created by the federal bankruptcy law and is one that could exist outside of bankruptcy it is not a core proceeding; it may be related to the bankruptcy because of its potential effect, but under section 157(c)(1) it is an “otherwise related” or non-core proceeding.
Contrary to the FDIC-R’s argument, what is or is not property of a bankruptcy
As Judge Walrath recently wrote in
In re Washington Mutual, Inc.,
It is without question that bankruptcy courts have exclusive jurisdiction over property of the estate. See 28 U.S.C. § 1334(e) (stating that the court in which a case under title 11 is commenced or is pending “shall have exclusive jurisdiction — (1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate”). See also, Cent. Va. Cmty. Coll. v. Katz,546 U.S. 356 , 363-64,126 S.Ct. 990 ,163 L.Ed.2d 945 (2006) (stating that “[cjritical features of every bankruptcy proceeding are the exercise of exclusive jurisdiction over all of the debtor’s property ... ”).
That jurisdiction includes jurisdiction to decide whether disputed property is, in fact, property of the estate. See, e.g., Salander O’Reilly Galleries,2011 WL 2837494 , at *12-13 (concluding that the bankruptcy court had core jurisdiction to decide priority of estate’s and creditor’s asserted interests in a piece of art and denying request for arbitration of issue); Mata v. Eclipse Aerospace, Inc. (In re AE Liquidation, Inc.),435 B.R. 894 , 904-05 (Bankr.D.Del.2010) (holding that the bankruptcy court had exclusive jurisdiction to determine whether or not disputed aircraft was property of the estate at the time of its sale); Williams v. McGreevey (In re Touch Am. Holdings, Inc.),401 B.R. 107 , 117 (Bankr. D.Del.2009) (stating approvingly that “[vjarious courts have concluded that matters requiring a declaration of whether certain property comes within the definition of ‘property of the estate’ as set forth in Bankruptcy Code § 541 are core proceedings.”).
The FDIC-R also argues that the resolution of the dispute over the Tax Refunds is non-core; the issue does not necessarily need to be resolved in the claims
The resolution of the claim objection and determination of the ownership of the Tax Refunds are identical disputes. The FDIC-R filed its proofs of claim to protect its asserted ownership interest in the Tax Refunds. The Plaintiffs have objected to those claims, asserting that the Holding Company is the owner of the Tax Refunds. Determination of the parties’ competing interests in the Tax Refunds is the very essence of the resolution of that claim objection. There can be no clearer example of Justice Robert’s description of a matter that must “necessarily be resolved in the claims allowance process.” As I already observed, the fact that the resolution of this issue centers on non-bankruptcy law is irrelevant, and indeed, the Stem decision presupposed that “the issue necessarily to be resolved” would involve non-bankruptcy law. 25
Accordingly, I hold that I have jurisdiction to consider this dispute and I further find that I have statutory and constitutional authority to enter a final judgment in this adversary proceeding because the issue of whether the Tax Refunds are property of the estate is an issue that arises in this bankruptcy case and must be resolved by ruling on the objection to the FDIC-R’s proofs of claim.
THE TAX REFUNDS ARE PROPERTY OF THE DEBTOR HOLDING COMPANY
This adversary proceeding is about the Tax Refunds. Are the anticipated Tax Refunds property of the Holding Company’s bankruptcy estate, as argued by the Plaintiffs, or property of the FDIC-R? 11 U.S.C. § 541 describes property of the estate as “all legal or equitable interests of the debtor in property as of the commencement of the case” and “[a]ny interest in property that the estate acquires after the commencement of the case.” However, the estate’s interest in property does not change the pre-bankruptcy nature of the interest. 11 U.S.C. § 541(d). 26
The Holding Company claims the Tax Refunds are property of its bankruptcy estate and that any interest of the Bank in the Tax Refunds is a claim; the FDIC-R argues that any tax refund to be paid to the Holding Company is paid to the Holding Company solely as agent or trustee for the Bank and the other members of the
As noted, there exists between the various members of the BU Consolidated Tax Group an Income Tax Allocation Agreement. That agreement, previously defined as the TAA, addresses the inter-company framework for filing a consolidated tax return for the BU Consolidated Tax Group, an “affiliated group” as such term is defined in Section 1504 of the Internal Revenue Code. 27 The TAA also specifies how taxes will be paid, and how any tax refund to which the BU Consolidated Tax Group may be entitled, once received, will be distributed.
Treasury and IRS Regulations
28
set forth the procedures pursuant to which consolidated returns are to be filed and the manner in which any tax refund will be paid. Treasury Regulation § 1.1502-77(a)(2) specifically provides that “any refund is made directly to and in the name of the common parent.” However, neither the applicable Treasury Regulations nor the Internal Revenue Code resolve, or even contemplaté, what happens after a tax refund is paid to the parent of a consolidated group. Neither the Treasury Regulations
29
nor the Internal Revenue Code contain any provision regarding what the parent is to do with the tax refund once received. Indeed, as several courts have noted “the refund is made payable to the parent and the acceptance of the refund by the parent discharges any liability of the government to any subsidiary. But these regulations are basically procedural in purpose and were adopted solely for the convenience and protection of the federal government.”
In re Bob Richards Chrysler-Plymouth Corp., Inc.,
The FDIC-R argues, relying on the
Bob Richards
case, that, in the absence of an express agreement to the contrary, a tax refund belongs to the failed bank, so long as the failed bank is the tax payer that generated all or most of the tax refund. Moreover, the FDIC-R asserts, the TAA provides any tax refund belongs to the Bank, and therefore the FDIC-R. The Plaintiffs argue that the provisions of the TAA clearly provide that any claim of the Bank to the Tax Refunds is merely a claim, not an ownership right, and, moreover, to the extent
Bob Richards
had any
In
Bob Richards,
the trustee of the Bob Richards Chrysler-Plymouth debtor estate sued its parent entity, Western Dealer Management, Inc. (“WDM”), to turn over a net operating carryback refund. WDM had filed a consolidated tax return on behalf of itself, Bob Richards Chrysler-Plymouth, and another wholly owned subsidiary. There was no dispute that the entire tax refund was due to the losses associated with the operations of the debt- or; however, pursuant to the applicable IRS regulations, the entire refund was turned over to WDM. In affirming the district court’s reversal of the bankruptcy referee’s order denying the trustee’s motion, the Ninth Circuit held that WDM received the tax refund solely as an agent for the consolidated group and “[s]ince there is no express or implied agreement that the agent had any right to keep the refund, we agree with the referee
30
and the district court that WDM was acting as a trustee of a specific trust and was under a duty to return the tax refund to the estate of the bankrupt.”
Although at no point did the Ninth Circuit explain how an agency turned into a specific trust arrangement, the FDIC-R argues, and certain courts have held, that the Bob Richards case created a federal common law rule that the parent of a consolidated group receives a tax refund as trustee of a specific trust in the absence of an implied or express agreement to the contrary.
The
Bob Richards
case has informed the analysis of every case that has addressed the relative rights of members of consolidated tax groups to actual or potential tax refunds, whether or not
31
there has been a written allocation agreement. In
B & D Bancorp, Inc. v. FDIC,
Dist. Ct. Case No. 94-1341-IEG (S.D.Cal. 1997),
32
the consolidated group did have a tax allocation agreement. The debtor parent holding company received a tax refund that was undisputedly attributable to tax activities at the bank level. The bank had also been taken over by the FDIC. The FDIC filed a contingent claim in the holding company’s bankruptcy case and asserted that the tax refunds were not property of the holding company’s bankruptcy estate, but rather, were held in trust by the holding company for the bank. The debtor holding company argued that, pursuant to the language of the tax allocation agreement, the obligations of the holding company to turn over all or part of the refund to the subsidiary bank amounted to a claim by the bank against the holding company, and thus no trust arrangement existed. The district court, bound by the holding in
Bob Richards
held that, because the tax allocation agreement in
Bancorp
not only required
In
Franklin Savings Corp. v. Franklin Savings Assoc.,
In
Ochs,
In sum, where the members of a consolidated tax group have no express or implied agreement or where the agreement does not fully address the relative rights of the parties, most courts have looked to the Bob Richards holding to resolve that a holding company in a consolidated group receives the money as an agent and trustee for the group. If there is an agreement, then the court interprets the relative rights of the parties in accordance with the agreement.
In this case the parties agree that the TAA sets out a framework for the allocation of tax liability and tax refunds for any consolidated group returns. The TAA requires that “[e]ach member of the Group shall record an inter-company income tax receivable or payable with BankUnited in the amount of its current net income tax asset or liability as determined in Section 2. Upon the filing of any consolidated income tax return or amended return, the inter-company income tax receivables and payables of all members of the Group shall be adjusted to reflect its share of the actual consolidated income tax payable or receivable as determined on a separate-entity basis.” (emphasis supplied). The Plaintiffs argue that it is clear that because the responsibilities and obligations of the members of the BU Consolidated Tax Group to each other are expressed in terms of payables and receivables, these inter-company obligations are debts and claims. Therefore, the failure of any member of the group to pay its fair share of a tax liability is a claim held by the entity that pays the tax, and the failure of any member to pay over to another member its proportionate share of any tax refund is a debt to that member. The FDIC-R doesn’t disagree with the Plaintiffs’ interpretation of the TAA, but argues that the provisions of the TAA make clear that the creditor is the Bank, because the TAA provides that the Bank, rather than the Holding Company, shall distribute any tax refund to the various other members of the BU Consolidated Tax Group. 36
Thus, both parties agree that the TAA governs and that the TAA describes the intercompany obligations as debt-
There is no question that the TAA presumes that at some point the Holding Company is going to deliver a tax refund to the Bank; that is implicit in the TAA’s provision that the Bank gives out the allo-cable shares in any refund to the group.
37
But there is also no question that the TAA does not require the Holding Company to deliver those funds to the Bank, nor does anything in the TAA suggest that the Holding Company accepts those funds from the IRS in any kind of trust or agency capacity or holds the funds under any specialized status that would cause those funds to be considered something other than the property of the Holding Company when in its possession.
Cf. Lubin v. FDIC,
Moreover, unlike the Bancorp case, nothing in the TAA suggests that there are particularized instances when the obligations between the Holding Company and the Bank would create a debtor/creditor relationship, such that in all other instances the nature of the obligation is something else. Indeed, as already noted, the entire relationship between the various members of the BU Consolidated Tax Group is described in the TAA only in terms of payables and receivables — inter-company debts and claims. Depending on how the tax balance sheet obligations are set up at a particular time, the fact that the Bank, when it holds the funds, stands as the debtor or creditor, does not change the fact that when the Holding Company holds the funds it also has the status of the debtor or creditor.
There is nothing under Delaware law,
38
which governs the TAA, that would preclude or alter this arrangement. Nor has the FDIC-R suggested the TAA violates Delaware corporate law. Like the Kansas law discussed by the bankruptcy court in
Franklin Savings Corp.,
Delaware’s corporate law allows the members of a consolidated group to allocate amongst themselves their rights and obligations with respect to tax obligations and refunds, and, in the absence of inappropriate overreaching, those agreements will be honored.
See In re Marvel Entertainment Group, Inc.,
Moreover, there is no specific trust
39
or agency
40
relationship created by the TAA, and no basis has been alleged or shown to find an implied trust. Under Delaware law, like most states, a constructive trust may only be imposed where there has been fraud or wrongdoing.
See Agilent Techs., Inc. v. Kirkland,
To the extent that Bob Richards creates a federal common law trust doctrine, I note that I am not bound by the Bob Richards case; moreover I believe it more likely the Ninth Circuit was not creating a “new law” but rather assumed a knowledge of California law that would have supported such a conclusion. More importantly, because Bob Richards recognizes that an express or implied agreement will control the issue of ownership of the Tax Refunds, the “federal common law” is inapplicable, for the reasons I have already stated. 41
In conclusion, I find I have jurisdiction to enter final judgment in this adversary proceeding, and I hold that the Tax Refunds are property of the Holding Company.
Notes
. Plaintiffs' Motion for Partial Summary Judgment on Count I of the Complaint and for Summary Judgment on Count II of the Complaint (ECF #81); Defendant's Cross-Motion for Summary Judgment on Counts I and II of the Amended Complaint (ECF # 90); Defendant’s Memorandum (A) in Opposition to Plaintiff's Motion for Summary Judgment on Count I of the Complaint and Summary Judgment on Count II of the Complaint and (B) in Support of its Cross-Motion for Summary Judgment on Counts I and II of the Amended Complaint (ECF # 91); Defendant’s Memorandum (A) in Opposition to Plaintiff's Motion for Summary Judgment on Count I of the Complaint and Summary Judgment on Count II of the Complaint and (B) in Support of its Cross-Motion for Summary Judgment on Counts I and II of the Amended Complaint (ECF # 92); Plaintiffs’ Response in Opposition to Defendant's Cross-Motion for Summary Judgment on Counts I and II of the Amended Complaint, and Reply in Support of Plaintiff’s Motion for Partial Summary Judgment on Count I of the Complaint and Summary Judgment on Count II of the Complaint (ECF # 102); Defendant's Reply in Support of Its Cross-Motion for Summary Judgment on Counts I and II of the Complaint (ECF # 103), Defendant’s Notice of Supplemental Authority (A) in Opposition to Plaintiffs’ Motion for Partial Summary Judgment on Count I of the Complaint and for Summary Judgment on Count II of the Complaint and (B) in Support of its Cross-Motion for Summary Judgment on Counts I and II of the Amended Complaint (ECF #111), Plaintiffs’ Response to Defendant’s Notice of Supplemental Authority (ECF # 114).
. The TAA refers to other unnamed members of the "Affiliated Group” within the meaning of Section 1504 of the Internal Revenue Code. Based on the various pleadings, I have assumed that the other Plaintiffs were a part of the BU Consolidated Tax Group. However, the identity of the other members is not relevant to this opinion.
. The FDIC-R amended the proofs of claim but the amendments did not alter the FDIC-R's claim to the Tax Refunds. After the Amended Complaint was filed, and pursuant to the Settlement Agreement, the proofs of claim were amended again.
. 28 U.S.C. § 157(d) provides that "[t]he district court may withdraw, in whole or in part, any case or proceeding referred under this section, on its own motion or on timely motion of any party, for cause shown. The district court shall, on timely motion of a party, so withdraw a proceeding if the court deter
. See supra note 4.
. See supra note 4.
. 12 U.S.C. § 1821(d)(6) requires that "the claimant may request administrative review of the claim ... or file suit on such claim (or continue an action commenced before the appointment of the receiver) in the district or territorial court of the United States for the district within which the depository institution’s principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim).”
. Also unresolved is a dispute between the FDIC-R and the Committee of Unsecured Creditors (on behalf of the Plaintiffs) regarding ownership of the proceeds of Directors' and Officers’ insurance policies.
. Under the Settlement Agreement, if the FDIC-R is determined to be the owner of the Tax Refunds, BUFC will receive the first $2.0 million of the Tax Refunds received by the FDIC-R and the FDIC-R will receive the remainder of the Tax Refunds and have no further claims against the BankUnited Debtors. Alternatively, if BUFC is determined to be the owner of the Tax Refunds, the FDIC-R
. In their Response in Opposition to Defendant's Cross-Motion for Summary Judgment on Counts I and II of the Amended Complaint, and Reply in Support of Plaintiff's Motion for Partial Summary Judgment on Count I of the Complaint and Summary Judgment on Count II of the Complaint (ECF # 102) the Plaintiffs argued that there was a scrivener's error in the TAA, suggesting there might be a disputed issue of fact. However, the Plaintiffs receded from this argument at the September 13, 2011 hearing.
. "Except as provided in subparagraph (D), all suits of a civil nature at common law or in equity to which the Corporation, in any capacity, is a party shall be deemed to arise under the laws of the United States.” 12 U.S.C. § 1819(b)(2)(A).
. See supra note 7.
. "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.
. "The district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction — (1) of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate.” 28 U.S.C. § 1331(e).
. The order set oral argument, without briefing on the jurisdictional issues, with the caveat that, should the parties either deem Judge Huck's prior order dispositive of the jurisdiction issue, or otherwise consented to my jurisdiction, the hearing would be canceled.
.Defendant’s Memorandum of Law on the Jurisdictional Issues Raised by the Court’s Order of August 9, 2011 (ECF # 151); Plaintiff's Post-Hearing Memorandum of Law in Support of the Court’s Authority to Enter Final Judgment on Counts I and II of the Amended Complaint (ECF # 152); and Plaintiff’s Notice of Filing of Supplemental Authority (ECF # 153).
. The FDIC-R could have also either renewed its Motion to Withdraw, or sought reconsideration of Judge Huck's earlier ruling in light of Stern. The FDIC-R did not do either.
.
Northern Pipeline Constr. Co. v. Marathon Pipe Line Co.,
. 28 U.S.C. § 151 provides "[i]n each judicial district, the bankruptcy judges in regular active service shall constitute a unit of the district court to be known as the bankruptcy court for that district. Each bankruptcy judge, as a judicial officer of the district court, may exercise the authority conferred under this chapter with respect to any action, suit, or proceeding and may preside alone and hold a regular or special session of the court, except as otherwise provided by law or by rule or order of the district court.”
. The FDIC-R has not argued that Count II is not a counterclaim as described in section 157(b)(2)(C).
. The Eleventh Circuit relied on the
Wood
test
in In re Toledo,
.
Safety Harbor,
. Indeed, Justice Roberts specifically stated that the very definition of what are core proceedings is "those that arise in a bankruptcy case or under title 11."
[W]e agree with Pierce that designating all counterclaims as "core” proceedings raises serious constitutional concerns ... [W]e will, where possible, construe federal statutes so as "to avoid serious doubt of their constitutionality.” ... But that "canon of construction does not give [us] the preroga-five to ignore the legislative will in order to avoid constitutional adjudication.” ... In this case, we do not think the plain text of § 157(b)(2)(c) leaves any room for the canon of avoidance. We would have to "re-writ[e]” the statute, not interpret it, to bypass the constitutional issue § 157(b)(2)(c) presents.
Id.
(citations omitted). This portion of the
Stem
opinion has given rise to at least one court questioning whether it even has authority to issue proposed findings of fact and conclusions of law with respect to those matters listed in section 157(b)(2) as core.
See In re Blixseth,
. The determination of what is or is not property of the estate has been widely recognized as a core matter.
See In re New Century Holdings, Inc.,
. The FDIC-R relied on two cases in its jurisdictional
memorandum
— Siegel
v. FDIC (In re IndyMac Bancorp, Inc.),
. "Property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest, such as a mortgage secured by real property, or an interest in such a mortgage, sold by the debtor but as to which the debtor retains legal title to service or supervise the servicing of such mortgage or interest, becomes property of the estate under subsection (a)(1) or (2) of this section only to the extent of the debtor’s legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold.” 11 U.S.C. § 541(d).
. Title 26 of the United States Code.
. I.R.C. § 1552 (2011), Treas. Reg. § 1.1502-75, and Treas. Reg. § 1.1502-77.
. The FDIC-R cites to an Intragency Policy Statement of Income Allocation ("Policy Statement”) in a Holding Company Structure which Policy Statement, the FDIC-R submits, "codifies” the
Bob Richards
rule. The FDIC-R provided no support for its suggestion that a policy can codify anything, and so I have not considered this Policy Statement in making my decision.
Accord Team Financial, Inc. v. FDIC (In re Team Financial, Inc.),
. This appears to be a mistake by the Ninth Circuit as the district court reversed the bankruptcy referee’s order.
.
See, e.g., FDIC v. Brandt (In re Florida Park Banks, Inc.),
.This is an unreported decision and presumably of little, if any, precedential value, but it is nonetheless relied upon the FDIC-R as illustrative of application of the Bob Richards "rule.”
. Under the tax allocation agreement in Bancorp, the holding company could "borrow” the tax refund from the bank, subject to applicable regulatory requirements governing loans to affiliates.
. This case was cited, and distinguished, by the district court in Bancorp.
."When a subsidiary pays the original tax and incurs net operating losses that generate a refund, the subsidiary is entitled to any such tax refund. The parent is not entitled to keep the refund, or to offset it against amounts due from the subsidiary. The parent simply acts as a trustee or an agent, and it should pay the funds over to the subsidiary.”
. Section 4 of the TAA states that "each member of the Group having a net inter-company income tax payable shall pay such amount to BankUnited [the Bank]; and Ban-kUnited shall reimburse any member of the Group for net intercompany income tax receivables. Any income tax refunds received by BankUnited shall be allocated among and paid to the members of the Group in accordance with Sections 2 and 3.”
. Neither party in its statement of uncontested facts suggested that the Holding Company routinely turned over the tax refunds to the Bank, but even if the Holding Company did so, that alone does not create an agency or trust relationship.
Accord Ochs,
. Both parties agree that Delaware law governs the resolution of this dispute.
Accord Jump v. Manchester Life & Casualty Management Corp.,
. Under Delaware law "[t]he elements of an express trust are a competent settlor and trustee, intent, sufficient words to create a trust, an ascertainable trust res, certain and ascertained beneficiaries, a legal purpose, and a legal term.”
In re Moran,
. Under Delaware law ”[a]n agency relationship is created when one party consents to
h&ve
another act on its behalf, with the principal controlling and directing the acts of the agent.”
Fisher v. Townsends,
.Based on this ruling I do not need to reach the Atherton issue raised by the Plaintiffs in their pleadings.