Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-17-01281/USCOURTS-ca10-17-01281-1/pdf.json

Parties Involved:
Federal Deposit Insurance Corporation
Appellee
Simon E. Rodriguez
Appellant
United Western Bancorp, Inc
Debtor

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

In re: UNITED WESTERN BANCORP, 

INC., 

 Debtor. 

------------------------------ 

SIMON E. RODRIGUEZ, in his capacity 

as Chapter 7 Trustee for the bankruptcy 

estate of United Western Bancorp, Inc., 

 Plaintiff - Appellant, 

v. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, in its capacity as 

Receiver for United Western Bank, 

 Defendant - Appellee. 

No. 17-1281 

(D.C. No. 1:16-CV-02475-WJM) 

(D. Colo.) 

_________________________________ 

ORDER

_________________________________ 

Before BRISCOE, SEYMOUR, and HOLMES, Circuit Judges. 

_________________________________ 

This matter is before the court on the appellant’s Petition for Panel Rehearing and 

Motion for Clarification. Upon consideration, the request for panel rehearing is granted in 

part and to the limited extent that footnote 3 of the original Opinion will be deleted. The 

Petition is otherwise denied, as is the motion to clarify. A copy of the revised version is 

FILED 

United States Court of Appeals 

Tenth Circuit 

January 29, 2019

Elisabeth A. Shumaker 

Clerk of Court

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 1
2 

attached to this order. The clerk is directed to file the amended version of the Opinion 

effective the date of this order. 

Entered for the Court 

ELISABETH A. SHUMAKER, Clerk 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 2
PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

In re: UNITED WESTERN BANCORP, 

INC., 

 Debtor. 

------------------------------ 

SIMON E. RODRIGUEZ, in his capacity 

as Chapter 7 Trustee for the bankruptcy 

estate of United Western Bancorp, Inc., 

 Plaintiff - Appellant, 

v. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, in its capacity as 

Receiver for United Western Bank, 

 Defendant - Appellee. 

No. 17-1281 

_________________________________ 

Appeal from the United States District Court 

for the District of Colorado 

(D.C. No. 1:16-CV-02475-WJM)

_________________________________ 

Mark E. Haynes (Michael M. Lane, with him on the briefs), Ireland Stapleton Pryor & 

Pascoe, P.C., Denver, Colorado, appearing for Appellant. 

Joseph 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. 

_________________________________ 

FILED 

United States Court of Appeals 

Tenth Circuit 

January 29, 2019

Elisabeth A. Shumaker 

Clerk of Court

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 3
2 

Before BRISCOE, SEYMOUR, and HOLMES, Circuit Judges. 

_________________________________ 

BRISCOE, Circuit Judge. 

_________________________________ 

This 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. 

Simon 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 decision. 

Exercising 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. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 4
3 

I 

a) UWBI and its affiliates 

UWBI is 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 office. 

b) The Tax Allocation Agreement 

UWBI’s 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. 

On January 1, 2008, UWBI and its affiliate subsidiaries entered into a Tax 

Allocation Agreement (the Agreement).1

 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. 

 1

 Prior to 2008, UWBI and its affiliates had filed taxes under similar, but not 

identical, written agreements. Aplt. App., Vol. I at 182. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 5
4 

The 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. 

Section 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 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 6
5 

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 applications.” Id. 

Under 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 part: 

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). 

c) UWBI’s filing of federal tax returns on behalf of the group 

UWBI 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 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 7
6 

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. 

For the 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. 

In 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 income.2

 

d) Appointment of the FDIC as receiver for the Bank 

The Bank was a federally chartered savings and loan association. On January 

21, 2011, the Office of Thrift Supervision (OTS) closed the Bank and appointed the 

Federal Deposit Insurance Corporation (FDIC) as receiver. Shortly thereafter, the 

FDIC notified the IRS of these events. 

e) UWBI’s bankruptcy proceedings 

Because the Bank was UWBI’s principal, if not sole, source of income, the 

Bank’s receivership resulted in UWBI becoming insolvent. On March 2, 2012, 

UWBI filed a petition for Chapter 11 bankruptcy. As of that date, the tax refund 

request that UWBI filed in 2011 was still pending before the IRS. 

 2

 The Internal Revenue Code permits corporations to “carryback” net operating 

losses for up to two taxable years. See 26 U.S.C. § 172. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 8
7 

On August 30, 2012, the FDIC filed a proof of claim in UWBI’s bankruptcy 

case in the aggregate amount of $4,847,000. The FDIC alleged that, as receiver for 

the Bank, it was entitled to the federal tax refund that was due and owing from the 

IRS to the affiliate group because the refund stemmed exclusively from the Bank’s 

business loss carrybacks. The FDIC also alleged that its claim covered “potential 

fraudulent transfers or unlawful dividends, unearned insurance premiums to the 

extent that the source of the premium payments was the Bank, insurance proceeds 

paid under applicable insurance coverage for any such losses, and other protective 

claims.” Id. at 62. 

The bankruptcy case was converted to a Chapter 7 proceeding on April 15, 

2013. Rodriguez was appointed as the Chapter 7 trustee for the bankruptcy estate. 

f) The adversary proceeding 

On April 16, 2014, the Trustee initiated this adversary proceeding by filing a 

complaint against the FDIC asserting three claims: (1) a claim for declaratory relief 

in the form of a determination that the tax refund was the property of the debtor 

rather than the FDIC, (2) a claim for turnover of the tax refund, pursuant to 11 U.S.C. 

§ 542, to the extent the FDIC possessed the tax refund, and (3) an objection to the 

FDIC’s proof of claim. The bankruptcy court subsequently authorized the tax refund 

to be deposited into the court’s registry. On November 25, 2014, the FDIC filed a 

counterclaim alleging that the FDIC, as the receiver for and successor to the Bank, 

owned the tax refund. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 9
8 

On October 30, 2015, the parties filed cross motions for summary judgment. 

The FDIC argued that there was “no provision in the . . . Agreement that transfers 

ownership of the Bank-generated tax refunds to [UWBI], indicates that the Bank 

intended to transfer beneficial ownership of the tax refunds to [UWBI], or otherwise 

alters the widely recognized default rule regarding ownership of tax refunds by the 

entity in a consolidated tax group that generated those tax refunds.” Aplt. App., Vol. 

I at 78. The FDIC also argued that “[e]ven if the anticipated tax refund is paid to 

[UWBI], [UWBI] acts as agent for the Affiliated Group and, therefore, would only 

hold bare legal title in the tax refund.” Id. The Trustee argued, in contrast, that the 

Agreement “establishe[d] a debtor-creditor relationship between [UWBI] and the 

Bank with respect to any tax refunds” and that “[i]f and when the Refund [wa]s paid 

to UWBI the funds w[ould] therefore become property of the [bankruptcy] Estate and 

[the FDIC] w[ould] have an unsecured, nonpriority claim for its pro rata share.” Id. 

at 178. 

In 2015, the IRS, after completing an audit, issued a refund in the amount of 

$4,081,334.67. 

On September 16, 2016, the bankruptcy court issued an opinion and order 

granting summary judgment in favor of the Trustee and denying the FDIC’s motion 

for summary judgment. In doing so, the bankruptcy court began by noting that 11 

U.S.C. § 541 outlines the creation of a bankruptcy estate and provides, in pertinent 

part, that the estate includes “‘all legal or equitable interests of the debtor in property 

as of the commencement of the case . . . wherever located and by whomever held.’” 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 10
9 

Aplt. App., Vol. II at 382 (quoting § 541(a)). The bankruptcy court also noted that 

“[a] long line of bankruptcy cases (even pre-dating the modern Bankruptcy Code) 

dictate that if a debtor owns or is entitled to a federal loss carryback tax refund, such 

refund generally becomes property of the debtor’s bankruptcy estate.” Id. at 383. 

The bankruptcy court concluded that the Agreement, “the Internal Revenue 

Code, and the IRS regulations all dictate that [UWBI], as the bank holding company 

for the Affiliated Group has at least bare legal title to the Tax Refund.” Id. at 386 

(emphasis in original). “After all,” the bankruptcy court noted, “26 C.F.R. § 1.1502-

77(d)(5) requires that the Tax Refund be made ‘directly to and in the name of’ 

[UWBI].” Id. 

The bankruptcy court in turn concluded that the FDIC failed to establish that 

the Bank had equitable ownership of the Tax Refund. In support of this conclusion, 

the bankruptcy court noted that “neither the Internal Revenue Code nor the IRS 

regulations establish which entity, [UWBI] or the Bank, has equitable or beneficial 

ownership of the Tax Refund.” Id. 

The bankruptcy court also determined that the Agreement created a debtorcreditor relationship between UWBI and the Bank with respect to the tax refund. In 

particular, the bankruptcy court concluded that the Agreement (a) “created fungible 

payment obligations through an intercompany account of payments and 

reimbursements” that indicated “the parties were creating a debtor-creditor 

relationship,” (b) contains no escrow, segregation, or use restrictions regarding what 

UWBI can or cannot do when it receives a tax refund from the IRS, and (c) delegates 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 11
10 

decision-making on tax matters to UWBI. Id. at 390. Consequently, the bankruptcy 

court concluded that UWBI was “the beneficial owner of the Tax Refunds,” and thus 

the Tax Refund “belong[ed] to the Trustee (as Trustee of the [UWBI] bankruptcy 

estate).” Id. 

Based upon these conclusions, the bankruptcy court determined “that the 

Trustee [wa]s entitled to the Tax Refund.” Id. at 400. The bankruptcy court 

emphasized that this “d[id] not leave the FDIC without a remedy” because it was 

“still a general unsecured creditor of the [UWBI] bankruptcy estate and [could] share 

pari passu with any other allowed general unsecured claims.” Id. at 400-01. 

The bankruptcy court entered judgment in the adversary proceeding on 

September 16, 2016. 

g) The district court’s decision 

The FDIC appealed and, on July 10, 2017, the district court issued an order 

reversing the judgment of the bankruptcy court. The district court concluded, in 

pertinent part, that the Agreement was “ambiguous regarding whether [UWBI] may 

keep the tax refund in the present circumstances” and “that any ambiguity [should] be 

construed in favor of the Bank.” Aplt. App., Vol. III at 529. The district court noted 

that the plain language of Section A.2 of the Agreement “declare[d] that the purpose 

of the [Agreement] is to set up an arrangement in which [UWBI] acts as nothing 

more than a go-between, as between the subsidiaries and the IRS.” Id. at 552. The 

district court also concluded that Section H.4 of the Agreement required it to construe 

any ambiguities in favor of the Bank and that, consequently, it was required to 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 12
11 

interpret the Agreement as requiring UWBI “to act as agent on behalf of the Bank in 

obtaining and remitting the refund.” Id. at 559. Accordingly, the district court 

concluded that UWBI “held no more than legal title to the Refund, while the Bank 

held equitable title,” and thus “[t]he Refund [wa]s not part of [UWBI’s] bankruptcy 

estate.” Id. at 560. 

The Trustee now appeals from the district court’s decision. 

II 

The Trustee’s arguments on appeal 

The Trustee argues that under “[t]he plain language” of the Agreement, 

“UWBI holds equitable title to the Tax Refund, and thus . . . the Refund is property 

of the UWBI estate.” Aplt. Br. at 12. In support, the Trustee asserts that the 

Agreement “imposes two reciprocal obligations.” Id. He contends that “[i]t requires 

each affiliate to pay to UWBI funds equal to the amount the affiliate would have been 

liable to pay the IRS had the affiliate filed an individual . . . tax return,” and it in turn 

“obliges UWBI to pay each affiliate funds equal to the amount of the refund to which 

that affiliate would have been entitled had it filed a separate tax return.” Id. at 12-13. 

Further, the Trustee argues that “[n]othing in the [Agreement] grants [the Bank] any 

interest in any IRS tax refund actually received by UWBI.” Id. at 13. In short, the 

Trustee argues, the Agreement “creates a debtor-creditor relationship, and the Bank 

holds only an unsecured claim against the UWBI estate in the amount of funds the 

Bank would have received had it filed a separate tax return.” Id. at 14. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 13
12 

Standard of review 

 “When hearing an appeal from a district court’s review of a bankruptcy-court 

order, ‘we independently review the bankruptcy court’s decision, applying the same 

standard as the . . . district court.’” In re Peeples, 880 F.3d 1207, 1212 (10th Cir. 

2018) (quoting In re C.W. Min. Co., 798 F.3d 983, 986 (10th Cir. 2015)). “We 

review bankruptcy-court orders granting summary judgment in adversarial 

proceedings de novo, and affirm if ‘there is no genuine dispute as to any material fact 

and the movant is entitled to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. 

P. 56(a)). 

The scope of UWBI’s bankruptcy estate 

It is well established that “[f]iling for Chapter 11 [or Chapter 7] bankruptcy 

has several relevant legal consequences,” the most important of which, for purposes 

of this appeal, is that “an estate is created comprising all property of the debtor.” 

Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973, 978 (2017) (citing 11 U.S.C. 

§ 541(a)(1)). This includes “all legal or equitable interests of the debtor in property 

as of the commencement of the [bankruptcy] case.” 11 U.S.C. § 541(a)(1). The 

estate does not include, however, “[p]roperty in which the debtor holds, as of the 

commencement of the [bankruptcy] case, only legal title and not an equitable interest 

. . . .” 11 U.S.C. § 541(d). Thus, in order for the tax refund to be considered part of 

UWBI’s estate, UWBI must hold both legal and equitable title to the tax refund. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 14
13 

The analytical framework for resolving ownership of the tax refund 

Section 1501 of the Internal Revenue Code (the Code) authorizes an “affiliated 

group” of corporations to “mak[e] a consolidated return with respect to income tax 

. . . .” 26 U.S.C. § 1501. The Code defines the term “affiliated group” to mean, in 

pertinent part, “1 or more chains of includible corporations connected through stock 

ownership with a common parent corporation which is an includible corporation 

. . . .” 26 U.S.C. § 1504(a)(1)(A). The Code does not, however, specify what 

happens when an affiliated group that has filed a consolidated federal tax return 

receives a tax refund. More specifically, the Code is silent with respect to the legal 

and equitable ownership of such a tax refund. 

Federal common law, however, provides a framework for resolving this issue. 

The general rule in this circuit, as outlined in Barnes v. Harris, 783 F.3d 1185, 1195 

(10th Cir. 2015), is that “a tax refund due from a joint return generally belongs to the 

company responsible for the losses that form the basis of the refund.” In adopting 

this principle, Barnes cited to and effectively adopted the Ninth Circuit’s decision in 

In re Bob Richards Chrysler-Plymouth Corp., Inc., 473 F.2d 262, 265 (9th Cir. 

1973).3

 3

 In Fed. Deposit Ins. Corp. v. AmFin Fin. Corp., 757 F.3d 530 (6th Cir. 

2014), the Sixth Circuit declined to adopt the Bob Richards rule on the grounds that 

it “is a creature of federal common law” and that “federal common law constitutes an 

unusual exercise of lawmaking which should be indulged only in a few restricted 

instances.” Id. at 535. Whether or not this is a valid criticism, we are bound by the 

decision in Barnes. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 15
14 

Bob Richards involved facts somewhat similar, but not identical, to those at 

issue here. Western Dealer Management, Inc. (WDM) was a parent corporation that 

wholly owned two subsidiary corporations, one of which was Bob Richards ChryslerPlymouth Corporation, Inc. (Bob Richards). In October 1965, Bob Richards filed a 

petition in bankruptcy. While that bankruptcy proceeding was pending, WDM filed 

consolidated federal income tax returns on behalf of itself and its two subsidiaries for 

the tax years 1965 and 1966. Notably, “[t]he return for 1966 showed that the 

consolidated group was entitled to a refund of taxes” in the amount of $10,063.25 

and “[t]he entire refund . . . was due to the earnings history of” Bob Richards. Id. at 

263. The bankruptcy trustee claimed that the refund belonged to the bankruptcy 

estate, but WDM claimed a right to the entire tax refund “as a set-off” of a “$45,000 

unsecured obligation of” Bob Richards. Id. 

The Ninth Circuit concluded that “[t]he Trustee, not WDM, [wa]s entitled to 

the refund.” Id. at 264. In reaching this conclusion, the Ninth Circuit first “note[d] 

that at the date of the filing of the petition in bankruptcy, the Trustee acquired any 

interest [Bob Richards] had in the carryback tax refund.” Id. The Ninth Circuit in 

turn noted there was “no evidence that [Bob Richards] or the Trustee at any time 

voluntarily assigned its rights in the refund to WDM.” Id. Although the Ninth 

Circuit acknowledged that Bob Richards “consented to the filing of a consolidated 

tax return,” it noted that “such consent [could not] be construed to include the 

transfer of a valuable asset without further consideration.” Id. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 16
15 

Relatedly, the Ninth Circuit noted “that there is nothing in the [Internal 

Revenue] Code or Regulations that compels the conclusion that a tax saving must or 

should inure to the benefit of the parent company or of the company which has 

sustained the loss that makes possible the tax saving.” Id. (quotations and brackets 

omitted). Thus, the Ninth Circuit noted, the normal rule is that “where there is an 

explicit agreement, or where an agreement can fairly be implied, as a matter of state 

corporation law the parties are free to adjust among themselves the ultimate tax 

liability.” Id. In the case before it, however, “the parties made no agreement 

concerning the ultimate disposition of the tax refund.” Id. at 265. 

All of which led the Ninth Circuit to adopt what has since become known as 

“the Bob Richards rule”: 

Absent any differing agreement we feel that a tax refund resulting solely 

from offsetting the losses of one member of a consolidated filing group 

against the income of that same member in a prior or subsequent year 

should inure to the benefit of that member. Allowing the parent to keep 

any refunds arising solely from a subsidiary’s losses simply because the 

parent and subsidiary chose a procedural device to facilitate their 

income tax reporting unjustly enriches the parent. 

Id. 

Applying these principles to the facts before it, the Ninth Circuit emphasized 

that “WDM received the tax refund from the government only in its capacity as agent 

for the consolidated group.” Id. And because “there [wa]s no express or implied 

agreement that the agent had any right to keep the refund,” it concluded “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.” Id. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 17
16 

The Trustee argues that Barnes and Bob Richards are inapplicable here 

because of the existence of the Agreement. But the Trustee is only partially correct. 

Barnes, which adopted Bob Richards, clearly applies to this case and outlines the 

general framework that we must apply in resolving the parties’ dispute. The Trustee 

is correct, however, that this case differs from Barnes and Bob Richards because 

there was a written agreement in place—the Agreement—that discussed the filing of 

a consolidated federal tax return. Consequently, as directed by Barnes and Bob 

Richards, we must look to the terms of the Agreement and, taking into account 

Colorado case law, decide whether it unambiguously addresses how tax refunds are 

to be handled and, if so, whether it purports to deviate from the general rule outlined 

in Barnes and Bob Richards. See generally Barnhill v. Johnson, 503 U.S. 393, 398 

(1992) (“In the absence of any controlling federal law, ‘property’ and ‘interests in 

property’ are creatures of state law.” (quotations omitted)). 

What does the Agreement say about tax refunds? 

As we shall explain, the written terms of the Agreement are, at best, 

ambiguous regarding the nature of the relationship that UWBI and the Bank intended 

to create with one another. Specifically, certain of its provisions suggest the 

existence of an agency relationship, while other provisions suggest the intent to 

create something other than an agency relationship. 

As noted, Section A.1 of the Agreement, which is contained under the heading 

“General Rule – Federal,” provides, in pertinent part: 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 18
17 

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. 

Aplt. App., Vol. I at 41. 

The first of these sentences—stating that “[i]f a regulated first-tier Affiliate,” 

i.e., the Bank, “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 USBI”—is 

arguably ambiguous. On the one hand, it purports to “entitle[]” the regulated affiliate 

“to a refund equal to the amount that it would have received had it not joined in the 

filing of a consolidated return.” On the other hand, when contrasted with the last 

sentence, it does not give the Bank the right to “retain” the refund. Instead, under the 

first sentence, a refund received by UWBI as a result of a net operating loss incurred 

by the Bank is taken into account by the parties in calculating their year-end 

liabilities to each other. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 19
18 

The second and third sentences of Section A.1 afford UWBI with two types of 

discretion: (1) whether to pay any refund at all to a nonregulated affiliate; and (2) 

when it pays a refund to any affiliate, whether to pay an amount equivalent to the 

amount the affiliate would have received had it filed its own income tax return, or 

instead to pay a greater amount. These sentences thus arguably point toward 

something more than a mere agency relationship. 

The last sentence of Section A.1 indicates that if a net operating loss of any 

affiliate is carried back to a year when that affiliate was filing a separate income tax 

return (or filing a consolidated return with another group), then “any refund . . . shall 

be retained by such Affiliate and such item will not enter into the calculation of 

liability to or from UWBI.” This arguably suggests that, in all other situations, an 

affiliate does not “retain” a tax refund and, instead, refunds are taken into 

consideration during the annual reconciliation of liability between the parties. 

Section A.2 of the Agreement, which is also contained under the heading 

“General Rule – Federal,” states: “In essence, this Agreement requires that each firsttier subsidiary be treated as a separate taxpayer with UWBI merely being an 

intermediary between an Affiliate and the Internal Revenue Service . . . .” Id. 

Although the term “intermediary” is not expressly defined in the Agreement, it is 

commonly understood to mean “[a] mediator or go-between.” Intermediary, Black’s 

Law Dictionary (10th ed. 2014). Thus, in contrast to most of Section A.1, Section 

A.2 clearly points to the existence of an agency relationship between UWBI and its 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 20
19 

affiliates, rather than a debtor/creditor relationship. In other words, it suggests that 

UWBI will simply act as a conduit through which the refund will pass. 

Section F of the Agreement, entitled “Tax Settlement Payments – Federal and 

State,” states, in pertinent part, that affiliates are to make “[e]stimated payments of 

Federal . . . taxes” to UWBI on a specified quarterly basis (April 15, June 15, 

September 15, and December 15). Id. at 44. Those estimated payments are to be in 

“an amount equal to the amount of any estimated federal income taxes which the 

Affiliate would have been required to pay on or before such dates if the Affiliate had 

filed its own separate income tax return for such taxable period.” Id. “Payments [by 

UWBI] to an Affiliate for net operating losses or similar items shall not be made 

under this provision, but rather on an annual basis pursuant to Section A” of the 

Agreement. Id. 

In turn, Section E of the Agreement, entitled “Tax Settlement Payments – 

Federal,” provides in pertinent part: 

1. Preliminary tax settlement payments are due on or before March 15 

following the end of the appropriate taxable year. Although 

overpayments of estimated taxes made by Affiliates are not refunded 

until final tax settlement is done, an Affiliate with a taxable loss for the 

year may recover estimated taxes paid for that year before final 

settlement if an “expedited refund” claim is filed with UWBI by

February 15 following the end of the tax year. 

2. Each first-tier Affiliate shall compute its final tax settlement liability 

based on the amounts included for that Affiliate (and its subsidiaries, if 

applicable) in the consolidated federal income tax return filed. A copy 

of such computation will be prepared by October 31, and any 

differences will be resolved. Final tax settlement payments or refunds 

are due on or before November 15. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 21
20 

Id. at 43-44. 

Considered together, Sections E and F obligate affiliates to make quarterly 

estimated tax payments to UWBI during the course of a taxable year, preliminary tax 

settlement payments to UWBI on or before March 15th following the end of the 

taxable year, and final tax settlement payments, if necessary, to UWBI on or before 

November 15th following the end of the taxable year. In turn, Section E, when 

considered together with Section A, obligates UWBI to (1) refund to its affiliates, by 

November 15th following the end of the taxable year, any overpayments of estimated 

taxes, (2) expedite any such refund if an affiliate has a taxable loss for the year in 

question and the affiliate files with UWBI an expedited refund claim by February 

15th following the end of the taxable year, and (3) ensure that, when a regulated firsttier affiliate incurs a net operating loss or excess tax credits, any such refunds paid to 

that affiliate are equal to or greater than the amount that such affiliate would have 

been entitled to receive had it not joined in the filing of the consolidated tax return. 

 Section G of the Agreement states that “[e]ach Affiliate hereby appoints 

UWBI as its agent . . . 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. 

Lastly, Section H of the Agreement, entitled “Miscellaneous,” contains two 

relevant paragraphs. Section H.1 states: 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 22
21 

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. Further, Subsection H.4 states, in pertinent part: 

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. 

Considered in its entirety, it is apparent that the Agreement was intended to 

authorize the filing of a consolidated tax return and, in turn, to create a series of 

payment obligations between UWBI and its affiliates—including the Bank—in order 

to carry out the goal of filing a consolidated tax return. Affiliates are obligated, by 

way of both estimated and final tax payments, to pay UWBI the precise amount of 

their federal income tax obligations. UWBI, in turn, is obligated to refund to its 

affiliates any overpayments of estimated taxes. When an affiliate incurs a taxable 

loss due to net operating losses or excess tax credits, UWBI’s obligations depend 

upon the nature of the affiliate. If the affiliate is a regulated, first-tier affiliate such 

as the Bank, then UWBI is obligated to pay that affiliate “a refund equal to” or 

greater than “the amount that it would have been entitled to receive had it not joined 

in the filing of a consolidated return with UWBI.” Id. at 41 (§ A.1 of the 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 23
22 

Agreement). For “nonregulated first-tier Affiliates,” UWBI has the discretion to 

decide whether or not to treat them similarly to regulated first-tier affiliates in terms 

of tax refunds. Id. 

Critically, however, the Agreement is, on its face, ambiguous with respect to 

the type of relationship it intends to create between UWBI and regulated, first-tier 

affiliates, such as the Bank, regarding the ownership of refunds from the IRS. 4 See 

Pinnacol Assurance v. Hoff, 375 P.3d 1214, 1229 (Colo. 2016) (noting that a contract 

is ambiguous if it is reasonably susceptible of more than one meaning); id. (“Whether 

a written contract is ambiguous is a question of law that we review de novo.”). On 

the one hand, portions of the Agreement quite clearly indicate the intent to create an 

agency relationship between UWBI and its regulated, first-tier affiliates. For 

example, Section A.2 states that “each first-tier subsidiary [is to] be treated as a 

separate taxpayer with UWBI merely being an intermediary between an Affiliate and 

the” IRS. Aplt. App., Vol. I at 41. Likewise, Section G states that UWBI is being 

appointed by each affiliate to act as its agent for purposes of filing the consolidated 

tax return and taking any action in connection therewith. On the other hand, portions 

of the Agreement arguably suggest the intent for UWBI to retain tax refunds before 

forwarding them on to regulated, first-tier affiliates. For example, parts of Section 

 4

 Rodriguez argues the FDIC has waived any argument that the Agreement is 

ambiguous. We reject that argument. The FDIC has consistently argued the 

Agreement creates an agency relationship, rather than a debtor/creditor relationship. 

The FDIC has also consistently argued that any ambiguity in the Agreement must be 

resolved in the Bank’s favor. Aplt. App., Vol. I at 89, 237; Vol. III at 423, 434, 452, 

453, 500, 520-21. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 24
23 

A.1 imply that UWBI will retain tax refunds and then later take them into account 

during the annual settlement process. In addition, the fact that Section A.1 affords 

UWBI with discretion regarding the amount to refund a regulated, first-tier affiliate 

(i.e, the exact amount of the refund or a greater amount) seems to suggest something 

other than an agency relationship. Finally, the ambiguity of the Agreement on this 

issue is compounded by the fact that it contains no language requiring UWBI to 

utilize a trust or escrow for tax refunds—which would suggest the existence of an 

agency or trust relationship—nor does it contain provisions for interest and 

collateral—which would be indicative of a debtor-creditor relationship. See In re 

NetBank, Inc., 729 F.3d 1344, 1351 (11th Cir. 2013); Fed. Deposit Ins. Corp. v. 

AmFin Fin. Corp., 757 F.3d 530, 535 (6th Cir. 2014). 

Resolving the Agreement’s ambiguity 

Notably, the Agreement itself provides a method for resolving the ambiguity. 

Section H.4 of the Agreement states that “[a]ny ambiguity in the interpretation hereof 

shall be resolved, with a view to effectuating such intent [i.e., to provide an equitable 

allocation of the tax liability of the Group among UWBI and the Affiliates], in favor 

of any insured depository institution.” Aplt. App., Vol. I at 45. Quite clearly, 

construing the Agreement to create an agency relationship between UWBI and the 

Bank with respect to federal tax refunds—and thereby affording ownership of the tax 

refund to the Bank—is more favorable to the Bank than construing the Agreement to 

create a debtor/creditor relationship and thus affording ownership of federal tax 

refunds to UWBI. We therefore conclude that the ambiguity in the Agreement must 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 25
24 

be construed in favor of the Bank and the FDIC, and that, consequently, the 

Agreement must be read as creating only an agency relationship between UWBI and 

the Bank. 

Conclusion 

In sum, we conclude that the Agreement creates an agency relationship 

between UWBI and the Bank and that, consequently, the Agreement’s intended 

treatment of tax refunds does not differ from the general rule outlined in Barnes and 

Bob Richards. Therefore, we conclude that the tax refund at issue belongs to the 

Bank, and that the FDIC, as receiver for the Bank, was entitled to summary judgment 

in its favor. 

III 

We AFFIRM the judgment of the district court and REMAND to the 

bankruptcy court for further proceedings consistent with this opinion. 

Appellate Case: 17-1281 Document: 010110118229 Date Filed: 01/29/2019 Page: 26