b i good morning your honor may have please the court my name is mark ames and i represent simon rodriguez the chapter seven bankruptcy trustee for united western bank corporation incorporated which  refer to as you w b this case concerns the ownership under section five forty one of the bankruptcy code of an i r s refund paid to you w b i which is a bank holding company in the amount of four the bank was seized by the f b i see him placed in receivership you w b i filed a chapter eleven bankruptcy protection that was later converted to a chapter seven and my client simon rodriguez was appointed chapter seven trustee accordingly the issue before the court is whether the refund is property is the of state pursuant to bankruptcy code section five forty one as a typical of bank holding companies you w b i and its  return for the holding company and its thirteen affiliates under the unambiguous terms of the t s a the a state owns both legal and equitable title to the refund the t legal or equitable interest of the debtor in property as of the commencement of the case legal or and so i was asking if the bankruptcy court found both legal and equitable title correct your honor  exception to five forty one a is five forty one the property of the state does not include an equitable interest in the property that the debtor does not hold the definition is equitable title is a title that indicates a beneficial interest in property and then that gives the holder the right to acquire formal legal title that's from the ridge oliver says gardner tenth circuit case and the but the bankruptcy court held and we maintain is  equitable title to your client according to the district court in the f d i c your honor it is the language of section eighty two which sums up the policy of the cia in essence this agreement requires that see intermediary it's anonymous with agent i would respectfully submit that the term is much broader than that it could mean an agent but it means many other things for example in my world i encounter even intermediaries frequently when i do any agent of any party to the mediation so intermediary is a very broad term it does not mean agent under colorado law to create an agent agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control that's the burton vs beneficial finance case with quotes restatement of agency section one and of course we are governed by colorado law here on this question before us right yes your honor and i forty one overlays a law on the question and then and so i'm i'm sort of puzzled by why the emphasis on indi  act in this case it's in to me that court is what california law i mean it seems to me that and the district court had some pretty i think reasonable points of critique regarding the in the back rupert so who cares what  mean should we be looking at colorado law determines question the intimate factors have been applied outside california and with respect i don't believe they simply declare california law they rely on general principles of common law as a spouse in the restatement of process and the restatement of agency that have been applied generally throughout the fifty states and just to circle back to the agency issue again there is nothing in this agreement that subjects and in something that by you to be the eyes discretion may never even come into existence and it certainly under under mind the idea that there is an agency relationship president but your honor i do think the indy mac factors are helpful in trying to sift the issue of whether a contract creates a formal agency or trust arrangement a when the tax refund is paid if you double u b i had not been a crop c it could have spent that money for anything you wanted it could have acquired an asset it could have paid a liability and then when the deadline in the contract came up to distribute that refunds to the affiliates in accordance with the contract formula it could have drawn on other resources could have drawn a line of credit maybe a different account there is a right of commingling which is contrary again to that is direct your own well i mean in that is would not normally have been dishes such as an interest rate associated with the money if that is in fact the debtor creditor relationship with respect your honor i would say no  litigated many many commercial contracts where there is no interest rates they did order a fault interest rate stated in the fact that this agreement was entered into among the members of the consolidated group where they are all related add that they would have to pay the bank what was owed it and i could come from other pots of money correct doesn't that indicate the bank has some interest in the money  anything but it that interest is no greater than the interest of any other unsecured creditor this estate virtually all of those relationships were entered into under the expectation that those creditors would be paid but what has happened in this case in almost all bankruptcy cases is the intervention of insolvency in the filing of a bankruptcy petition because there isn't enough money to pay all the and secured creditors and congress has set forth a carefully constructed set of rules in the bankruptcy code as to how you deal with that situation and we respectfully submit what the f the i c is attempting to get this court to do is to create a non code case law a preference for itself over and above the other unsecure creditors when well what do we do with the isn't bob richards the bob richards rule why don't we do it i mean that comes into play and it's been used by course many times across the country where the subsidiary was in bankruptcy not the parents so the parent did not present the five forty one issue that we hand and with the court there held is that the parties can enter into or a formal agreement parties that is members of a consolidated group can enter into a formal agreement that allocates how matters of tax payment and tax refund are going to be allocated among the group but absent an agreement they created a submit but yes your honor i think that's the reason bob richards doesn't apply is that we do have the written agreement before us and that's how other courts have distinguished operators and that also applies to the tenth circuit barnes case which applied the bob richards rule and in that case neither party was in bankruptcy so there was no issue of of the state ownership of funds at all in  barns another indicator that we have a debtor creditor relationship is that the t s a has no as pro segregation or use restrictions  if we're looking at the additional terms of the agreement refunds are kept the refunds to affiliates generally shall not exceed the amount claimed or received as an i r s tax refund resulting from a carry back knowledges that we're dealing here with a debtor creditor relationship and not the trust or agency relationship and with respect your honor i would like to reserve the balance of my time thank you us concerning whether it confirms or creates an agency relationship with respect to r s tax refunds either way you should hold as the district court said that the tax refund and existing recognize default will the court said quote this may be done through an explicit agreement or an agreement implied by the parties past practices unquote now it's never been suggested by anybody that there are any seventy three and this is the court in a colloquy with counsel for the trustee at line sixteen on eight to seventy three so the d a you acknowledge that it doesn't express lee explicitly specifically deal with ownership of the tax refund do you acknowledge that a brief colloquy between the court mr haynes and mr hayne says quote i agree with that now later it was an attempt to try to say well not explicit but implicit here's colloquy it appears at page two seventy four the court i've read the da and it just doesn't say anything about who owns the tax refund why should i not find that mr haynes an agreement on another issue so unless this e a s a explicitly addresses who owns this tax refund the bob richards rule adopted by this court in orange we harris would apply  buyout richards rule the sixth circuit ultimately said no not because the bob richards rule by its own terms wasn't alcohol but because the sixth circuit believed that bob richards would be federal common law and that was not an appropriate precisely the same and that's this when the i r s who would send a tax refund directly to whatever party in a consolidated group ok isn't headed to it but that's interviewee resolving provision of the ca of high seer there were multiple versions of the multiple provisions of the ga that region we can be read to confirm or create an agency relationship section eight to  which my brother council is particularly as it says in essence in other words what this agreement is about this agreement requires that each first year subsidiary of bank is one be treated as a separate tax payer with u b i the holding company merely being an intermediary between an affiliate and you turn a revenue service merely an intermediary that's precisely the role that the holding company would play in the absence of this g s a but that's not the only commission your honor if you go to your honor's if you go to section g  i'm going to read the the apartment language because very long passage but it says each affiliate hereby avoids u b i parent as its agent for the purpose of filing consolidated federal income tax returns for connection with a consolidated return is any action so you have those two provisions yeah match your honour's this entire actual occasion agreement evidences concerns about insured financial institutions as they  an obligation to pay the tax refund of course not because the iris would pay it directly and the intention of this mere intermediary language is to continue that same relationship now the bankruptcy court said well protection but it does not make the f b i cease interpretation an reasonable in light of the purpose of this agreement it is just not reasonable to conclude that the parties would have addressed each of these intricate aspects of the relationship between the bank and the holding company that they would protect the bank against getting less than it would get on a return that they would protect the bank under sci fi from ever having to pay money more than it was required to dollars of irish tax refunds and they don't say a word about batch not reasonable but even if the court were to accept pretty well what he means by giving of ownership i mean the bank is never nobody signs of bank didn't have a right to get paid the question is whether there are interest in that specific refund i mean that that's a distinct thing i mean and there's there's no doubt that there would have been some allocation to the bank ultimately if absent bankruptcy but that's so that that's not the runner there's no doubt that it would have been total allocation to the bank and the reason for that is is because the bankruptcy court made the following finding quote the tax refund  two thousand and ten net operating losses the affiliate group filed a tax refund request for four million plus dollars to recover a portion of the taxes paid by the bank on its two thousand a taxable income specific money if there's nothing in the t a that doesn't keep them from co mingling that money and moving that money around just once you get paid as long as you get the money that owes you didn't was not in ca that says this has to be th means and that's why we're looking at colorado law to try to figure out what agent mean agency needs an agent that has some obligation to report to the principal does it not and in this context that that's not the case the that case which is not only am i going to quote with this exact quote appears in our brief and this is the law our modeling agency quote the authority of an agent may be as broad as the principal chooses to make it may grant power to the agent g one a action in connection with this tax refund and when it receives this tax refund it was receiving it as an agent it had the responsibilities of an agent and those responsibilities included protecting those funds and keeping them for its principal thank you thank you for your time your hon thank you your honor your honor the closest this agreement comes to talking about ownership is in a one where the reciprocal duties of each party are laid out each affiliate shall pay you w b i an amount regulated affiliate is entitled to a refund equal to the amount it would have been entitled to receive had it filed separately it doesn't say and by the way it owns those last minute argument is in there is that the i r s regulations specifies that a holding company appoint one quote unquote agent because the i r s will only deal with one party from a consolidated group but it doesn't say the regulation doesn't say that person has to be a common law agent for the all the purposes that implies under state law what the agreement says is that as a point it's agent for the purpose of filing such consolidated federal income tax returns for the group as you w b i may elect to file and making any election application or taking action connection there with the bankruptcy court characterize that as a procedural agency to comply with iris regulations and we submit that's the correct result well because if the essence of agency under colorado law is controlled by the principal and one what about the phillips case which apparently you didn't respond to that he just spoke is the straw converses beneficial finance case which says that it's a manifestation of consent by one person to another so that the other shall act on his behalf and subject to thank you both for your arguments this morning the case is submitted