honor good morning my name kentucky's position requires that the court rewrite kentucky statutes in three ways we believe they are trying to avoid the fact that paul was the actual payer of the tax no one disputes that the cash came out of vaults pockets and found its way to kentucky coffers the way they must ask the court must rewrite the statute in this case so that kentucky when this first to insert a word licensed before the w dealer in section one thirty eight point two one zero eight and kentucky can see this and page twenty two of their brief the court was also deletes the phrase to enforce the duty of the dealer to collect the tax at one thirty eight point two one zero and the court must read out of the statute the fact that a dealer such as bulk such as a marathon or b p is acting as a trust officer the facts in this case are extremely simple and ball trucks then either delivered gas and get in kentucky or outside and ok in this case the issue is there the trucks at issue went to either indiana or tennessee so let me ask you this question under the kentucky statutes when the marathon or the key gets gas and puts it in the terminals in louisville is that quote receipt close quote or does receipt happen only when it is loaded on to the tanker trucks judge i think that question is answered in one thirty eight point two one zero eight and that if you look at the words and you know i had to look at statutes and and walk you through them but in that case it specifically says that the gas is not received until has been loaded for bulk delivery so in other words from the point of view of marathon only when it gets loaded on i think i understand your argument to be it's clear that it's not b p or marathons tanker trucks it's bulks tanker trucks yes yes and that actually the  within i think the first sentence of a two ten a it states that is received quote when it has been loaded for all deliveries and earlier in the sentence to talk specifically about being in refineries that statute is right on point but even if they did the kentucky tries to use up the toot toot which is a negative to sort of change the meaning of that statute i would point out that even if ball the last  actually i think the last heard that the first sentence avery doesn't apply but it's the last or the last two sentences that apply but even if you find that for some reason b p or marathon actually was received deemed received under a duty to transmit along to the kentucky department of revenue yes you are and in fact there is even another situation there and it's in the record if you're docket fifty two  at three sixty six there is a situation where either b p or marathon actually sent back an invoice for twenty six thousand because they had not added the tax on earlier they hadn't quite caught up with the fact that the license had been hold and therefore they were supposed to add the tax so they sent it and so they sent an invoice for twenty six thousand just for tax nothing else so it's inconceivable how you can argue well it's simply an add on to the price because two of your brief which is a page rome small roman twelve if we were to affirm you want to go back to the bankruptcy court a litigator the constitutionality of the interpretation of the statutes that would result in affirm is correct and actually judge i understand where you're going with that and we had just in our brief we had seen i think that the the earlier pleadings let me be clear we believe at this point after having reviewed it given an additional thought we believe the jurisdiction is final for this reason judge clerk in the district court ruled that we need to bulk never pay the tax if bulk never paid the tax i don't believe bulk can argue the constitutionality of it so therefore i think the the bankruptcy court would be required to simply say there was no tax paid you don't have a constitutional argument why do you just seed you don't have a constitutional  would we we don't based on the law the case based on how a judge clever has ruled we're with and wait a minute so are you waiving any constitutional claim if we were to affirm judge clover on the merits constitutional claim if we affirm yes so that all the bankruptcy court would have to do is enter judgment for the kentucky department ready yes and you're not going to argue as you said in your brief that you want to ask the bankruptcy court to examine the legal determinations that it made that were overturned by the district court that is correct i don't believe we have the ability to that's certainly all surprising turn around but i have a different question about what you were doing or your doing has ball ever asked why is it that the right way to go about this judge i believe the reason is because one when ball this is preventing her seat for my involvement received from kentucky saying we will consider your refund at some point time that's how the bulk anticipated to go forward while didn't understand that there was that already twelve whole read the e mail or misread the e mail that's a long long ago i'm asking why you or your predecessor in this bankruptcy i will i need to double check and i'll come back on rebuttal and answer it this way i think the for your satchel limitation may have run on merit on marathon and b p at that point bulk would have gotten the benefit of having filed bankruptcy and extended that is if the being a very simple issue and that is whether the k b r is permitted to retain significant amounts of tax paid one product that was admittedly shoot out was to excuse me the what  kentucky department of revenue whether they are entitled to retain tax proceeds on product which admittedly was shipped out of state and which they say in their own grace which there is no effective mechanism for purposes of obtaining a recovery within their own briefs they admit that either b p or marathon would have no idea whether tax whether product was shipped out of state and effectively they have no idea because that your theory is i mean at least the theory of everybody on this side of the courtroom is that neither b p nor marathon has any interest in this tax money they are in fact agents of the state and so they wouldn't be saying pay us back not only that within the brief the kentucky department of revenue indicates that they would have no obligation even if that refund were requested to pay it to bulk so it's really three separ marathon to know that if b p or marathon were to seek a refund and if they were successful in obtaining that refund they would have no obligation to pay that then because keep the money exactly so effectively what occurs is that what the conductor department of revenue would like this court to believe is that bulk of that marathon p p would seek a refund for product which it has already been paid and then keep that and we believe within the commercial industry that's not going to occur now a couple other points if i may ok you're in your i'll give you a minute to make a thank you i appreciate that courtesy mr baldwin is in mr kirkman has indicated that the kentucky department o revenue is argument really hinges on whether they receive the whether bulk receive the product or marathon or b p receive the product we believe regardless of how that comes out the structure of the kentucky statute and if i may point out in particular section one three eight point two seven one one p provides a two point two five percent fee to a licensed dealer for purposes of collecting the fee and respectfully we would request or we would fee was being paid and it was not acknowledged that this tax would be passed on to the deal or why would that fee be necessary as opposed to simply reducing the tax burden rather than putting a fee in there and also it pointed out in the briefs it shows where the licensed dealer is listed as a trust officer and is also authorized for purposes of collecting the tax and we have seen that the invoices show the separate line items there for the tax and again the kentucky partner revenue in the case that there is no economic incentive for the license fee or to collect a tax based on all of that we believe your honor that the the taxpayer was in this case both and that they are entitled to the refund and thank you for we really think the court should look at who the real aggrieved parties are in this litigation in the sense of who bears the consequence of their poor kentucky department of revenue if they are able to keep this tax revenue that was collected for a purpose that was not intended by their statute their statue was intended to collect taxes for gasoline that was used in kentucky this gasoline was used in kentucky and if if if if  they're able to prevail here and not have to refund these taxes my client who issued a letter of credit to support the fuel bond that was put in place after that the period the letter of credit and the fuel bond were there to support and make sure the taxes were paid the taxes were paid but now the third they're not paid if the if the if the kentucky gets to keep the tax revenue for fuel it wasn't consumed in kentucky mike mike kline a small community bank gets hit for a million dollars the creditors of the bankruptcy of state who are out millions of dollars a portion of the money that would otherwise be available for them under the district court's view nobody ever paid any tax to kentucky b p and marathon just raised the price by a certain amount roughly nine percent is that happens to be the tax amount and b p in marathon collected that money and they never received out statute any gasoline in kentucky they certainly didn't receive it when it went into bulks truck and they didn't receive it when it went to their terminals and kentucky winds up one point two million dollars in the black and it's a disturbing theory for me since it clearly indicated to be tax on the invoices and it didn't stay in in kentucky i mean you've taken something like the license dealer status which gives a tremendous benefit of being able to net things out every month as opposed to being unlicensed and blown it up into a windfall for the state while your i don't believe it's a windfall and really it's as if gas went to indiana and tennessee you're just collecting sales tax on or whatever this time whatever you want to call it the oil tax gasoline tax on fuel that you didn't have a right to dealer transfers to somebody who's on the unlicensed and bulk has made much of the fact that they didn't have any mechanism to recover this money they didn't have a mechanism to recover this money they could have kept their license they were the they didn't what about judge easter brooks theory your theory makes me think that you think that wouldn't work because first of all marathon and b p are i don't legal obligation to file a refund on bulks if they were inclined to respond to a request like that they're equally under no legal obligation to pass on passed back to blow whatever they received as a refund i don't believe that they're under any statutory obligation under well they already feel rich it actually paid the money to kentucky correct they would probably be in trouble if they filed a refund ok sure they didn't turn the money over to ball yet you have an address to retrieve and that's that's the situation  a disturbing theory frankly that you haven't and since this is really all about how these various kentucky statutes interact with one another and your brief is one of the most apologetic br about how this evolved it seems to me if we're in the realm of equity and unjust enrichment maybe there is some equity here on both side as well they thought that they were dealing in the system under are saying ok you know now you can file for your refund because you're back in good financial standing they pay a lot of money to get the license back it seems to me that's a quite rational reading less straight reading did it at least some of your employees didn't know or they would be able to say something different the people you were representing were telling both which was maybe foolish to listen to them the more they were telling the whole here's how you're supposed to go about this during this period of time that no one knew ex ante how long it was going to go that you don't have a license you have to pay the tax up front and you've got to do it through your supplier because their license once you get your license back you'll be back in good standing you can be back in the situation where you can get it out and you can also get a refund for taxes that you didn't have to pay because the statute sometimes uses the term license dealer often uses the term dealer and in one critical place uses the term dealer or other person so you read it is so it always says license dealer but it really doesn't well we believe that that's the primary purpose of the statutory didn't say only licensed dealers except when they meant to say only licensed dealers well we believe that the system provides a mechanism for both to have received those refunds the statutes that company if it wants to avoid paying kentucky taxes should not buy fuel in kentucky it should buy fuel in the states where they're not just words there's absolutely no system other than boycotting kentucky and  they do they're just going to have to pay double gasoline taxes once to kentucky and once to the state where it's just repeated just like the law that seems to indicate that sounds that are comply with our licensing requirements which is the purpose of the licensing statute says the statute clearly seems to indicate that some dealers are non licensed fillers they're still dealers there they're dealers but they're required to pay the increased price and only a license dealer can apply for a refund or it doesn't i'm having trouble finding that part of the statute it would also like to address one of the things that mr corcoran said about the equities in the creditors the creditors the bankruptcy creditors which this refund with it would be divided amongst in kentucky is also has its own proof a claim for other taxes the other creditors chose to do business with with all kentucky did not kentucky takes all comers if it's a question of equity as between between credit creditors we feel that that book has more responsible the other creditors have or sponsibility since they statement that b p in marathon didn't receive the gasoline and or pay the tax and that wasn't in our opinion the view of the district court are in our opinion the view of our view of the kentucky statute when marathon and b p loaded the gas onto the tank trucks of bulk and the state of kentucky one thirty eight to one ten or to ten five days says that they received the time they didn't get received anything the statute also may cover transport may cover transfer but it's absurd to say that if i give something to you i have received it where you take it your honor one thirty eight to ten five defines the term received is not is not a common meaning of received it's a technical term and every what you receive means you have to look at bulk delivery into tank cars consigned to destinations but it doesn't say who it doesn't say the loader receives it it says the tank car receives it if b p or marathon was putting it into its own tank car from the terminal i would unless the contrary is established as either the or where it's going that's not who receives it it's an absurd argument to say that the peon marathon received at the moment they transferred to bulk p marathon moved it from the terminals into some other companies tank cars it's the original holder of the gas that receives it is not what i read his dad tried to say at all but i and the withholding tax or you know it's clear that one person is collecting in the mouth from one person giving it to the state that's not at all defacing i choose but i i would not overwhelm that argument the sales tax has the merchant collecting from the consumer and remitting to the state but if if b p and marathon didn't collect any tax from bulk the state reserves the right to go directly to  whatever wait a minute so you're telling me that you think that if this invoice didn't have a line for kentucky gasoline tax and kentucky somehow got wind of the fact that  now we haven't gone after the downstream purchasers from bulk we've just looked to the bottom company because that's the way the kentucky statute is now your honor there was another point where you had mentioned that we were reading the statute to say well you were always means licensed or and and to be honest with you that is probably got into in the bankruptcy court because we were thinking of the full effect and that's why we were thrown off the ball brought up the definition of dealer in the oral argument for the not because they thought they were wrong on the issue of all but because the agent had made all the adjustments in the way they were inconsistent with the irises own detailed procedure for doing so sometimes these things happen it's embarrassing you know it is embarrassing when we make a mistake might my view is that the this is a very technical and complex area i think it really requires close inspection of greasing the statues in order to answer it just to bring up one final thing and five p i want to explain their to their final she senses of one ten or teach and five be referred to license dealer to license dealer sales we to discuss those in the context of our brief because that was what was relevant before balt lost his license and after ball regained its license and we are trying to present a holistic picture of how kentucky tax law operates where in practical reality everything is ready to the licensed dealer unless someone is breaking the law  brook so issue about the contract the contract is not in the record and i haven't read it so i can even hope you know it's just not in the record i would also point out on page twenty four of kentucky brief they state under kentucky statutes in no uncertain terms that even if the pm marathon had a peanut refund they would have no duty or any reason to pay anything to paul finally i think the whole licensing issue is really a credit terms the if you get credit terms and show the bond your credit worthy then you have the ability to pay a month later and you get some other benefits when you're not licensed you're not a law breaker i mean both the book was submitting monthly reports i believe it was doing what it was doing it didn't get the benefits of a license dealer financially it had to pay for them its pay twice the tax twice