In re: UNITED WESTERN BANCORP, INC., Debtor.
FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as Receiver for United Western Bank, Defendant-Appellee. SIMON E. RODRIGUEZ, in his capacity as Chapter 7 Trustee for the bankruptcy estate of United Western Bancorp, Inc., Plaintiff - Appellant,
from the United States District Court for the District of
Colorado (D.C. No. 1:16-CV-02475-WJM)
E. Haynes (Michael M. Lane, with him on the briefs), Ireland
Stapleton Pryor & Pascoe, P.C., Denver, Colorado,
appearing for Appellant.
Brooks, Counsel (Colleen J. Boles, Assistant General Counsel,
Kathryn R. Norcross, Senior Counsel, and Michelle Ognibene,
Counsel, on the brief), Federal Deposit Insurance
Corporation, Appellate Litigation, Arlington, Virginia,
appearing for Appellees.
BRISCOE, SEYMOUR, and HOLMES, Circuit Judges.
BRISCOE, Circuit Judge.
appeal, which arises out of a bankruptcy adversary
proceeding, concerns the ownership of a federal tax refund.
The tax refund was issued by the Internal Revenue Service
(IRS) to United Western Bancorp, Inc. (UWBI), a thrift
holding company that had, under the terms of a written
"Tax Allocation Agreement, " filed consolidated
returns on behalf of itself and several subsidiary
corporations. The tax refund was the result, however, of net
operating losses incurred by United Western Bank (the Bank),
one of UWBI's subsidiaries.
Rodriguez, in his capacity as the Chapter 7 Trustee for the
bankruptcy estate of UWBI, initiated this adversary
proceeding against the Federal Deposit Insurance Corporation
(FDIC), as receiver for the Bank, alleging that the tax
refund was owned by UWBI and was thus part of the bankruptcy
estate. The bankruptcy court agreed and entered summary
judgment in favor of the Trustee. The FDIC appealed to the
district court, which reversed the decision of the bankruptcy
court. The Trustee now appeals from the district court's
jurisdiction pursuant to 28 U.S.C. § 158(d)(1), we agree
with the district court that the tax refund belongs to the
FDIC, as receiver for the Bank. Consequently, we affirm the
judgment of the district court and remand to the bankruptcy
court for further proceedings.
and its affiliates
a Colorado corporation and a "unitary thrift [or bank]
holding company." Aplt. App., Vol. I at 41. UWBI owned
several affiliate subsidiaries, including the Bank. The Bank,
UWBI's principal subsidiary, was headquartered in Denver
and operated a community-based banking network that was
comprised of eight banking locations and a loan servicing
Tax Allocation Agreement
affiliate subsidiaries were "members of an affiliated
group . . . within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986." Id. at 41;
see 26 U.S.C. § 1504(a). Beginning in 2004 and
continuing thereafter, the affiliated group "file[d] . .
. consolidated federal income tax returns." Aplt. App.,
Vol. I at 41.
January 1, 2008, UWBI and its affiliate subsidiaries entered
into a Tax Allocation Agreement (the
Agreement). The Agreement's preamble noted that
the affiliates had previously filed, and intended to continue
to file, "consolidated federal income tax
return[s]." Id. The preamble further stated
that "UWBI and the Affiliates desire[d] to establish a
method for (i) allocating the consolidated tax liability of
the Group among its members, (ii) reimbursing UWBI for the
payment of such tax liability, and (iii) compensating each
member of the Group for the use of its losses by any other
member of the Group." Id.
Agreement in turn, under Section A, entitled "General
Rule - Federal, " outlined how federal tax payments
would be made:
1. Except as specifically set forth herein to the contrary,
each Affiliate shall pay UWBI an amount equal to the federal
income tax liability such Affiliate would have incurred were
it to file a separate return (or, if appropriate, a
consolidated return with its subsidiary affiliates). If a
regulated first-tier Affiliate incurs a net operating loss or
excess tax credits, the regulated Affiliate is entitled to a
refund equal to the amount that it would have been entitled
to receive had it not joined in the filing of a consolidated
return with UWBI. Similar treatment is optional at UWBI
discretion for nonregulated first-tier Affiliates. Any refund
shall generally not exceed the amount claimed or received as
a refund resulting from a carryback claim filed by UWBI.
However, this shall not prevent UWBI from the ability to make
a refund over the amount received or claimed as a refund or
carryback, if in its sole discretion it believes such payment
is in its best interest. Additionally, if part of [sic] all
of an unused consolidated net operating loss, net capital
loss, tax credit or similar type item is allocated to an
Affiliate pursuant to Regulations Section 1.1502-21, and it
is carried back, if utilized, or it is carried forward,
whether or not utilized, to a year in which such Affiliate
filed a separate income tax return or a consolidated federal
income tax return with another group, any refund or reduction
in tax liability arising from the carryback or carryforward
shall be retained by such Affiliate and such item shall not
enter into the calculation of liability to or from UWBI.
2. In essence, this Agreement requires that each first-tier
subsidiary be treated as a separate taxpayer with UWBI merely
being an intermediary between an Affiliate and the Internal
Revenue Service ("IRS").
Id. The Agreement also, in Section C, included
"specific policies designed to cover certain factual
scenarios" including, for example, "[c]haritable
contributions." Id. at 42.
G of the Agreement stated that "[e]ach Affiliate hereby
appoints UWBI as its agent, as long as such Affiliate is a
member of the UWBI group, for the purpose of filing such
consolidated Federal income tax returns for the UWBI group as
UWBI may elect to file and making any election, application
or taking any action in connection therewith on behalf of the
Affiliates." Id. at 44. Each affiliate also,
under Section G, "consent[ed] to the filing of any such
returns and the making of any such elections and
Section H, entitled "Miscellaneous, " the Agreement
contained a provision regarding refunds from the IRS:
In the event of any adjustment to the tax returns of the
Group as filed (by reason of an amended return, claim for
refund, or an audit by a taxing authority), the liability of
the parties to this Agreement shall be re-determined to give
effect to any such adjustment as if it had been made as part
of the original computation of tax liability, and payments
between the appropriate parties shall be made within 10
business days after any such payments are made or refunds are
received, or, in the case of contested proceedings, within 10
business days after a final determination of the contest.
Id. (quoting § H.1).
Also under Section H, the Agreement stated, in pertinent
The intent of this Agreement is to provide an equitable
allocation of the tax liability of the Group among UWBI and
the Affiliates. Any ambiguity in the interpretation hereof
shall be resolved, with a view to effectuating such intent,
in favor of any insured depository institution.
Id. at 45 (quoting § H.4).
UWBI's filing of federal tax returns on behalf of the
proceeded, in accordance with the terms of the Agreement, to
file federal income tax returns for the consolidated group.
In doing so, "the tax liabilities and tax benefits"
were computed "on a separate-entity basis for each
Affiliate, " but UWBI ultimately filed one tax return
"on a consolidated basis." Id. at 82.
tax year 2008, UWBI filed a federal income tax return for the
affiliated group and reported that the Bank generated $34,
397, 709 in taxable income. The return indicated that UWBI
itself did not generate taxable income in 2008.
2010, the Bank suffered at least $35, 351, 690 in losses.
Based upon the Bank's 2010 net operating losses, UWBI, at
some point in 2011, filed on behalf of the affiliated group a
tax refund request of $4, 846, 625 to recover a portion of
the taxes paid by the Bank on its 2008 taxable
Appointment of the FDIC as ...