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FILED

APR 26 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NV-16-1173-KuLJu

 )

CM REED ALMEDA 1-3062, LLC, ) Bk. No. 2:13-bk-19117

 )

Debtor. )

_______________________________)

 )

CM REED ALMEDA 1-3062, LLC, )

 )

Appellant, )

 )

v. ) MEMORANDUM*

 )

HARRIS COUNTY, )

 )

Appellee. )

_______________________________)

Submitted Without Oral Argument

on February 24, 2017

Filed – April 26, 2017

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Gary A. Spraker, Bankruptcy Judge, Presiding

 

Appearances: Gerald M. Gordon and Mark M. Weisenmiller of

Garman Turner Gordon LLP and Douglas S. Draper of

Heller, Draper, Patrick, Horn & Dabney, L.L.C. on

brief for appellant CM Reed Almeda 1-3062, LLC;

Jeanette E. McPherson of Schwartzer & McPherson

Law Firm and John P. Dillman of Linebarger Goggan

Blair & Sampson, LLP on brief for appellee Harris

County.

 

Before: KURTZ, LAFFERTY and JURY, Bankruptcy Judges.

*This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8024-1.
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INTRODUCTION

Chapter 111 debtor CM Reed Almeda 1-3062, LLC appeals from

an order denying its motion under § 505 to determine its ad

valorem property tax liability. With respect to property taxes

assessed between 2007 and 2009, the bankruptcy court held that

CM Reed Almeda lacked standing because it did not own the

property at the time the taxes were assessed. As for all

property taxes assessed in 2014 and before, the bankruptcy court

held that § 505 barred it from determining CM Reed Almeda’s tax

liability because the time to challenge those taxes had expired

under applicable nonbankruptcy law before CM Reed Almeda filed

its motion. Finally, concerning 2015 and 2016 taxes, the

bankruptcy court ruled that it would exercise its discretion to

abstain.

We agree with the bankruptcy court’s determination that

CM Reed Almeda’s request for a determination of its tax liability

for 2014, and all years prior, was time barred. In addition, we

hold that the bankruptcy court did not abuse its discretion in

abstaining from hearing and deciding the dispute over 2015 and

2016 taxes.

Therefore, we AFFIRM. 

FACTS

CM Reed Almeda has not challenged the bankruptcy court’s

recitation of the basic underlying facts set forth in the court’s

1Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all “Rule” references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037. All “Civil Rule” references are to

the Federal Rules of Civil Procedure.

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memorandum of decision entered on May 31, 2016, so we have relied

on that recitation.

CM Reed Almeda filed its chapter 11 petition in 2013. Its

sole asset is roughly 16 acres of vacant land in Harris County,

Texas. The land formerly was used for oil and gas exploration,

but more recently it was platted for residential development. 

The land’s former use resulted in environmental issues. 

Additionally, numerous property transfers, encumbrances and

foreclosures clouded title. In 2011, Larry Ramming and Dick

Wheeler purportedly acquired the land via a foreclosure.

Thereafter, many tax notices were sent to Ramming and Wheeler as

the owners of record.

At the time of its 2013 bankruptcy filing, CM Reed Almeda 

claimed ownership of the land. According to CM Reed Almeda, it

filed bankruptcy in order to take advantage of the Bankruptcy

Code provision enabling debtors to sell assets free and clear of

liens and other interests. CM Reed Almeda expected to clear

title to the land, through a bankruptcy sale.

Another issue CM Reed Almeda sought to address in the

bankruptcy case was its disputed tax liability to Harris County. 

Harris County filed two proof of claims asserting secured and

priority tax claims.2 The first proof of claim was for

prepetition ad valorem real property taxes arising between 2007

2Actually, the tax claims asserted by Harris County were an

aggregation of tax liability owed to a variety of city and county

taxing authorities. For ease of reference and because the

identity of the specific taxing authorities is not relevant to

our analysis or the resolution of this appeal, we collectively

refer to these taxing authorities as Harris County.

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and 2013 in the aggregate amount of $556,275.07. Harris County

submitted over 400 pages of supporting documentation, consisting

of partial tax statements issued by the Harris County Tax

Assessor-Collector. The tax statements showed that the taxing

entities had assessed taxes against each subdivided lot rather

than against the land as a whole, and most of the statements

identified Wheeler and Ramming as the “certified owners” of the

land. None of them identified CM Reed Almeda as certified owner,

nor is there any indication in the proof of claim or the

supporting documentation as to whether or when CM Reed Almeda

received notice of the tax assessments.

Harris County’s second proof of claim was for postpetition

ad valorem real property taxes arising in 2014 and 2015 in the

aggregate amount of $111,492.52. The partial tax statements

submitted in support of Harris County’s amended postpetition

claim are similar to those submitted in support of Harris

County’s prepetition claim, inasmuch as they identify Wheeler and

Ramming as the “certified owners” of the property and none of

them identify CM Reed Almeda as the certified owner.

To challenge Harris County’s tax claims, CM Reed Almeda

filed a motion under § 505 asserting that taxes were improperly

assessed against its land and that it did not receive notice of

the taxes assessed. Harris County opposed the motion. Harris

County argued in relevant part that CM Reed Almeda lacked

standing to challenge the taxes imposed for 2007 through 2009

because CM Reed Almeda did not own the land at the time. Harris

County also argued that the time period for disputing the tax

liability had expired and alternately argued that the bankruptcy

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court should abstain from hearing the tax dispute. 

After holding a hearing on CM Reed Almeda’s motion, the

bankruptcy court issued a memorandum decision, which held in part 

that the court lacked authority under § 505(a) to determine

CM Reed Almeda’s tax liability and abstained in part from

resolving the dispute. For taxes incurred between 2007 and 2009,

the bankruptcy court reasoned that CM Reed Almeda lacked standing

under Texas law to challenge those taxes because CM Reed Almeda

did not own the land at the time the taxes were incurred. 

For taxes incurred between 2010 and 2014, the bankruptcy

court ruled that CM Reed Almeda’s challenge was untimely. The

court pointed out that § 505(a)(2)(C) prohibits the bankruptcy

court from considering the debtor’s challenge to ad valorem

property taxes if the applicable period under nonbankruptcy law

for challenging the taxes had expired.3 The court interpreted

state tax law in concluding that CM Reed Almeda was time barred

both from directly challenging the taxes assessed and from

complaining that it did not receive notice of the taxes assessed.

For taxes incurred in 2015 and 2016, the bankruptcy court

concluded that it would abstain. The court set forth two

alternate abstention tests for resolving discretionary abstention

3The bankruptcy court further ruled that the critical date

for purposes of determining timeliness was the date CM Reed

Almeda filed its § 505 motion and that § 108(a) did not apply to

extend any state-law-imposed deadlines for disputing ad valorem 

property tax liability. CM Reed Almeda has not challenged these

rulings on appeal, so we decline to discuss them further. See

Christian Legal Soc’y v. Wu, 626 F.3d 483, 487–88 (9th Cir. 2010)

(declining to address matters not specifically and distinctly

discussed in the appellant’s opening brief); Brownfield v. City

of Yakima, 612 F.3d 1140, 1149 n.4 (9th Cir. 2010) (same).

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issues: one that has been used outside the Ninth Circuit

specifically to resolve the question of whether the bankruptcy

court should exercise its discretion under § 505 to determine the

debtor’s tax liability and another that is the prevailing Ninth

Circuit test used to resolve discretionary abstention questions

arising under 28 U.S.C. § 1334(c)(1). Under either test, the

court determined discretionary abstention was appropriate.4

The bankruptcy court entered its order denying CM Reed

Almeda’s § 505 motion on May 31, 2016, and CM Reed Almeda timely

appealed. 

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(A), (B) and (O), and we have jurisdiction

under 28 U.S.C. § 158.

ISSUES

1. Was CM Reed Almeda’s § 505 motion untimely?

2. Did the bankruptcy court abuse its discretion in deciding to

abstain from determining CM Reed Almeda’s tax liability for

2015 and 2016?

STANDARDS OF REVIEW

The bankruptcy court’s determination that CM Reed Almeda’s 

§ 505 motion should be denied as untimely turned on its

interpretation and application of the Bankruptcy Code and Texas

law. We review these matters de novo. Rund v. Bank of Am. Corp.

4The bankruptcy court further stated that, to the extent its

rulings regarding the taxes incurred between 2007 and 2014 turned

out to be incorrect, its abstention ruling would apply to those

taxes as well.

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(In re EPD Inv. Co., LLC), 523 B.R. 680, 684 (9th Cir. BAP 2015).

The bankruptcy court’s permissive abstention ruling is

reviewed for an abuse of discretion. In re Bankr. Petition

Preparers who are not Certified Pursuant to Requirements of Ariz.

Sup. Ct., 307 B.R. 134, 140 (9th Cir. BAP 2004). A bankruptcy

court abuses its discretion if it fails to identify or apply the

correct legal rule or its application of the correct legal rule

was “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support

in inferences that may be drawn from the facts in the record.’”

Yellow Express, LLC v. Dingley (In re Dingley), 514 B.R. 591, 596

(9th Cir. BAP 2014) (citing United States v. Hinkson, 585 F.3d

1247, 1262–63 (9th Cir. 2009) (en banc)). 

Similarly, findings of fact made in the course of the court

exercising its discretion are reviewed under the clearly

erroneous standard and are not clearly erroneous unless they were

illogical, implausible or without support in the record. 

Hinkson, 585 F.3d at 1261-62 & n.21.

DISCUSSION

A. Timeliness Issue

The Bankruptcy Code authorizes the bankruptcy court to

determine the debtor’s liability for taxes unless they were

adjudicated prepetition “by a judicial or administrative tribunal

of competent jurisdiction.” § 505(a)(1), (a)(2). With respect

to ad valorem property taxes, the Code restricts the bankruptcy

court’s authority by prohibiting the court from determining the

debtor’s tax liability when the period “under applicable

nonbankruptcy law” for challenging the amount of taxes has

expired. § 505(a)(2)(C).

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In turn, Texas law generally permits property owners to

protest ad valorem property tax assessments until the later of

June 1 of the tax year in question or until 30 days after the

date notice was delivered to the property owner, whichever is

later. Texas Tax Code § 41.44(a)(2). More importantly for this

appeal, a tax protest based on a failure to receive proper notice

must be filed no later than the date the taxes become delinquent. 

Texas Tax Code § 41.44(c); see also Heritage Operating, L.P. v.

Barbers Hill Indep. Sch. Dist., 496 S.W.3d 318, 325 (Tex. Ct.

App. 2016) (“A property owner is not entitled to have the

lack-of-notice protest heard and determined unless, before the

taxes become delinquent, the property owner files the notice of

protest . . . .”). While taxes generally become delinquent on

February 1 of the year following the year in which the taxes were

imposed, Texas Tax Code § 31.02(a), there is a special, extended

delinquency date for purposes of a notice-based tax protest:

. . . a property owner who files a [noticebased] protest under Section 41.411 on or

after the date the taxes on the property to

which the notice applies become delinquent,

but not later than the 125th day after the

property owner, in the protest filed, claims

to have first received written notice of the

taxes in question, is entitled to a hearing

solely on the issue of whether one or more

taxing units timely delivered a tax bill. If

at the hearing the appraisal review board

determines that all of the taxing units

failed to timely deliver a tax bill, the

board shall determine the date on which at

least one taxing unit first delivered written

notice of the taxes in question, and for the

purposes of this section the delinquency date

is postponed to the 125th day after that

date.

Texas Tax Code § 41.44(c-3) (emphasis added).

The bankruptcy court, here, effectively determined that,

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pursuant to § 505(a)(2)(C), it lacked authority to determine

CM Reed Almeda’s liability to Harris County for tax years 2007

through 2014 because CM Reed Almeda did not timely challenge

these tax assessments and did not timely complain of the absence

of written notice of these taxes.5 In relevant part, the

bankruptcy court explained that Texas Tax Code § 41.411 is the

exclusive remedy for contesting the notice given of tax

assessments and that, under Texas Tax Code § 41.44(c-3), Harris

County’s proofs of claim had been sufficient notice of the taxes

to cause the 125-day extension period to begin to run. Because 

CM Reed Almeda’s § 505 motion was not filed within 125 days of

the filing of Harris County’s proofs of claim, the § 505 motion

was time-barred for the 2014 tax year and for all tax years prior

5For the tax years 2007, 2008 and 2009, the bankruptcy court

actually ruled that CM Reed Almeda lacked standing to dispute

these taxes because it did not own the land at the time the taxes

were imposed. Citing Houston Land & Cattle Co. v. Harris Cnty.

Appraisal Dist., 104 S.W.3d 622, 625 & n.2 (Tex. Ct. App. 2003),

the bankruptcy court held that only the owner of the property at

the time the assessment was made has standing to contest either

that assessment or an alleged lack of notice of that assessment.

Read as a whole, Houston Land & Cattle Co. arguably might be

better interpreted as a forfeiture case rather than a standing

case. That is to say, because the prior owners had forfeited any

rights to contest the appraisals or lack of notice thereof, the

prior owners had no surviving challenge rights that they could

have passed to a successor owner. Id. at 623-25. 

In any event, CM Reed Almeda has not challenged the

bankruptcy court’s “standing” holding on appeal. Moreover, even

if CM Reed Almeda had challenged this holding, it would be

unnecessary for us to review it because the bankruptcy court’s

timeliness ruling adequately supports its denial of the § 505

motion for the 2007, 2008 and 2009 tax years. We can affirm on

any ground supported by the record. Fresno Motors, LLC v.

Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014).

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to 2014.

On appeal, CM Reed Almeda has not disputed that, before it

filed its § 505 motion, the time had expired directly to

challenge the 2007 through 2014 tax assessments. Nor has CM Reed

Almeda challenged on appeal the bankruptcy court’s determination

that Texas Tax Code § 41.411 is the exclusive remedy available to

contest notice of taxes assessed. See Heritage Operating, L.P.,

496 S.W.3d at 323 (citing Texas Tax Code § 42.09 and stating

“[a]ny ground of protest that the Code authorizes can be

adjudicated only by the procedures it prescribes”); Houston Land

& Cattle Co., 104 S.W.3d at 624 (citing Texas Tax Code § 42.09

and stating “[t]he Tax Code provides the exclusive remedy for

adjudication of property tax protests.”). Nor has CM Reed Almeda

argued that its alleged failure to receive notice: (1) affected

the validity of the tax assessments or the underlying appraisals,

or (2) absolved it of an affirmative duty to contest the tax

assessments or the underlying appraisals. See Denton Cent.

Appraisal v. CIT Leasing, 115 S.W.3d 261, 265-66 (Tex. Ct. App.

2003); see also Texas Tax Code § 25.19(d).

CM Reed Almeda specifically and distinctly argues only one

timeliness issue in its appeal brief – that the bankruptcy court

erred when it held that Harris County’s proofs of claim

constituted sufficient notice of the taxes assessed to trigger

the 125-day extension period under Texas Tax Code § 41.44(c-3). 

Without citing any authority in support, CM Reed Almeda argues

that the type of “written notice” referenced in Texas Tax Code

§ 41.44(c-3) is the same type of “written notice” required under

Texas Tax Code § 25.19, which specifies the type of notice the

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chief appraiser must give property owners when (inter alia) the

appraised value of the taxed property increases from the prior

year. Texas Tax Code § 25.19(a). Such notice generally must

include:

(1) a list of the taxing units in which the property is

taxable;

(2) the appraised value of the property in the

preceding year;

(3) the taxable value of the property in the preceding

year for each taxing unit taxing the property;

(4) the appraised value of the property for the current

year, the kind and amount of each exemption and partial

exemption, if any, approved for the property for the

current year and for the preceding year, and, if an

exemption or partial exemption that was approved for

the preceding year was canceled or reduced for the

current year, the amount of the exemption or partial

exemption canceled or reduced;

(5) if the appraised value is greater than it was in

the preceding year, the amount of tax that would be

imposed on the property on the basis of the tax rate

for the preceding year;

(6) in italic typeface, the following statement: “The

Texas Legislature does not set the amount of your local

taxes. Your property tax burden is decided by your

locally elected officials, and all inquiries concerning

your taxes should be directed to those officials”;

(7) a detailed explanation of the time and procedure

for protesting the value;

(8) the date and place the appraisal review board will

begin hearing protests; and

(9) a brief explanation that the governing body of each

taxing unit decides whether or not taxes on the

property will increase and the appraisal district only

determines the value of the property.

Texas Tax Code § 25.19(b).

However, nothing on the face of Texas Tax Code § 41.44(c-3)

or in the context in which it uses the term “written notice”

supports CM Reed Almeda’s assertion that the two Texas Tax Code

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statutes require the same type of notice. To the contrary, Texas

Tax Code § 41.44(c-3) was drafted to address a specific, narrow

due process defect in the prior version of the Texas Tax Code

that sometimes left some property owners without any remedy when

the property owner received no notice of the taxes assessed

before they became delinquent. See Heritage Operating, L.P.,

496 S.W.3d at 325 (citing Indus. Commc’ns, Inc. v. Ward Cty.

Appraisal Dist., 296 S.W.3d 707, 715–17 (Tex. Ct. App. 2009)). 

Under Texas law, “due process is satisfied if the taxpayer is

given an opportunity to be heard before some assessment board at

some stage of the proceedings.” Denton Cent. Appraisal Dist.,

115 S.W.3d at 266. Because this due process standard sets a

relatively low bar for notice requirement purposes, we are not

persuaded that the detailed notice requirements of Texas Tax Code

§ 25.19(b) apply to the notice requirement set forth in Texas Tax

Code § 41.44(c-3). Cf. Rio Valley, LLC v. City of El Paso,

441 S.W.3d 482, 492 (Tex. Ct. App. 2014) (citation served in

delinquent tax suit was sufficient to constitute “written notice

of the taxes” within the meaning of Texas Tax Code § 41.44(c-3)).

Harris County’s proofs of claim gave CM Reed Almeda notice

of the taxes assessed for each of the tax years between 2007 and

2014. With respect to tax years 2007 through 2013, Harris

County’s proof of claim no. 1-1 gave CM Reed Almeda notice of the

taxes nearly two years before CM Reed Almeda filed its § 505

motion. As for the 2014 taxes, Harris County’s proof of claim

no. 3-1 gave CM Reed Almeda notice of the taxes roughly 150 days

before CM Reed Almeda filed its § 505 motion. 

We need not decide precisely what type of notice is

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sufficient in every instance to satisfy the due process concerns

underlying Texas Tax Code § 41.44(c-3)’s 125-day window. It

suffices to say here that Harris County’s proofs of claim were

sufficient to trigger this 125-day notice period, which expired

before CM Reed Almeda filed its § 505 motion. 

Therefore, the bankruptcy court correctly held that CM Reed

Almeda’s notice-based tax protest for taxes assessed in 2014 and

before was untimely and correctly concluded that it had no

authority under § 505 to determine CM Reed Almeda’s tax liability

for those tax years.

B. Abstention Issue

For the 2015 and 2016 tax years, the delinquency date for

payment of taxes had not yet occurred, so the period for

protesting 2015 and 2016 taxes had not yet closed at the time

CM Reed Almeda filed its § 505 motion. Thus, relief under § 505

was not time barred for the 2015 and 2016 tax years. However,

the bankruptcy court relied upon the discretionary abstention

doctrine to determine that it would abstain from determining

CM Reed Almeda’s tax liability for the 2015 and 2016 tax years. 

The bankruptcy court applied two different discretionary

abstention tests and held that, under either test, discretionary

abstention was appropriate. The first test has been used outside

the Ninth Circuit specifically to resolve the question of whether

the bankruptcy court should exercise its discretion under § 505

to determine the debtor’s tax liability.6 The second test –

6As articulated by the bankruptcy court the factors in the

first test are:

(continued...)

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enunciated in Christensen v. Tucson Estates, Inc. (In re Tucson

Estates, Inc.), 912 F.2d 1162, 1167 (9th Cir. 1990) – is used in

the Ninth Circuit and elsewhere to resolve discretionary

abstention questions arising under § 1334(c)(1). Neither party

on appeal disputes the correctness of applying the Tucson Estates

test in determining whether a bankruptcy court should hear and

decide a § 505 motion. Furthermore, virtually all of the factors

in the first test are subsumed within the Tucson Estates test. 

Therefore, we will assume without deciding that application of

the Tucson Estates test is the correct means for determining

whether a bankruptcy court should abstain from hearing and

deciding a motion under § 505.

The Tucson Estates test sets forth the following factors for

consideration:

(1) the effect or lack thereof on the efficient

administration of the estate if a Court recommends

abstention, (2) the extent to which state law issues

predominate over bankruptcy issues, (3) the difficulty

or unsettled nature of the applicable law, (4) the

6(...continued)

(1) the complexity of the tax issues to be decided;

(2) the need to administer the bankruptcy case in an

orderly and efficient manner;

(3) the burden on the bankruptcy court’s docket;

(4) the length of time required for trial and decision;

(5) the asset and liability structure of the debtor;

and

(6) the prejudice to the taxing authority.

Mem Dec. (May 31, 206) at 15:16-16:4 (citing IRS v. Luongo

(In re Luongo), 259 F.3d 323, 330 (5th Cir. 2001)).

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presence of a related proceeding commenced in state

court or other nonbankruptcy court, (5) the

jurisdictional basis, if any, other than 28 U.S.C.

§ 1334, (6) the degree of relatedness or remoteness of

the proceeding to the main bankruptcy case, (7) the

substance rather than form of an asserted “core”

proceeding, (8) the feasibility of severing state law

claims from core bankruptcy matters to allow judgments

to be entered in state court with enforcement left to

the bankruptcy court, (9) the burden of [the bankruptcy

court’s] docket, (10) the likelihood that the

commencement of the proceeding in bankruptcy court

involves forum shopping by one of the parties, (11) the

existence of a right to a jury trial, and (12) the

presence in the proceeding of nondebtor parties.

In re Tucson Estates, 912 F.2d at 1167 (citing In re Republic

Reader’s Serv., Inc., 81 B.R. 422, 429 (Bankr. S.D. Tex. 1987)). 

1. Tucson Estates Factors 1 & 6 – Effect of Abstention on

Case Administration and Relationship Between Main

Bankruptcy Case and Proceeding in Question 

The bankruptcy court opined that abstention would not

negatively impact administration of CM Reed Almeda’s bankruptcy

case. At the time of the bankruptcy court’s decision,

administration of CM Reed Almeda’s single-asset bankruptcy estate

hinged on a sale of the land, and no sale had yet been

consummated. More importantly, the court noted that the debtor

“has always contemplated” a liquidating plan to resolve its

chapter 11 case and that “the debtor has no general unsecured

creditors” who would be inconvenienced by any delay in

distribution of any future sale proceeds pending resolution of

the parties’ surviving tax disputes. The court also found

telling the fact that CM Reed Almeda had made no effort to seek

any determination of any of its tax liability until roughly two

years after the bankruptcy case was commenced and Harris County

filed its proof of claim covering tax years 2007 through 2013.

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On appeal, CM Reed Almeda essentially contends that the

estate’s inability to pay any creditors until the tax dispute

with Harris County is resolved is sufficient impact on

administration of the estate, and a sufficient relationship to

the main case, to militate against abstention. But CM Reed

Almeda: (1) did not challenge any of the facts the bankruptcy

court relied upon in assessing the relationship and impact

factors; (2) did not challenge any of the inferences the

bankruptcy court drew from those facts; and (3) did not challenge 

the court’s application of those facts in weighing the first and

sixth Tucson Estates factors. Simply put, CM Reed Almeda has not

demonstrated that the bankruptcy court’s application of the

correct legal standard “was illogical, implausible, or without

support in inferences that may be drawn from the facts in the

record.” Hinkson, 585 F.3d at 1262–63. Nor is any such

misapplication evident to us.

2. Tucson Estates Factors 2 & 3 – The Predominance of

State Law Issues and their Complexity or Difficulty

As the bankruptcy court put it, “the [§] 505 motion involves

only state law issues,” and “[r]esolution of those issues is more

complex than asserted by the debtor.” The bankruptcy court

explained that contesting the assessed value of the land and

determining the extent to which anticipated remediation costs

could be taken into account would be governed by state law and

that the parties appeared to disagree regarding these issues

given the positions they asserted in their moving and opposition

papers.

On appeal, CM Reed Almeda posits that the legal issues the

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bankruptcy court expressed concern over were not really in

dispute. Instead, it contended that the parties’ dispute focused

exclusively on a factual issue: the prospective costs of

remediation. CM Reed Almeda has not explained why the bankruptcy

court’s perception of the anticipated litigation was incorrect or

even why its own perception might be more correct than the

bankruptcy court’s on this issue. Put another way, CM Reed

Almeda has not demonstrated that the bankruptcy court’s

assessment of Tucson Estates Factors 2 & 3 was illogical,

implausible, or without support in the record.

3. Tucson Estates Factor 4 – Pending Related Proceeding

Before a State Court or Tribunal

The bankruptcy court conceded that there was no state

proceeding pending to address CM Reed Almeda’s disputed tax

liability, but the court gave this factor little weight. For the

tax years 2015 and 2016, the bankruptcy court pointed out that CM

Reed Almeda could avail itself in Texas of the procedures and

grounds for contesting Harris County’s tax assessments permitted

under Texas law and that there was no legitimate need to

substitute a Nevada bankruptcy court for the Texas tribunals

available to address the disputed tax liability. 

Citing Security Farms v. Int’l Bhd. of Teamsters, 124 F.3d

999, 1009 (9th Cir. 1997), CM Reed Almeda argues on appeal that

the absence of a pending state proceeding is fatal to the

bankruptcy court’s discretionary abstention ruling. But CM Reed

Almeda’s reliance on Security Farms is misplaced. The absence of

a pending state proceeding is not dispositive here. If we were

to hold to the contrary – that the absence of a pending state

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proceeding is dispositive – our holding would be in conflict with

In re Tucson Estates, 912 F.2d at 1167, and Eastport Assocs. v.

City of Los Angeles (In re Eastport Assocs.), 935 F.2d 1071,

1075-76 (9th Cir. 1991). Both Tucson Estates and Eastport

Assocs. identified “the presence of a related proceeding

commenced in state court or other nonbankruptcy court” as one of

a dozen factors to weigh in deciding whether to apply

discretionary abstention. If the presence of a state court

proceeding was a mandatory requirement, both Tucson Estates and

Eastport Assocs. would have specified that the presence of a

state proceeding was an absolute prerequisite, rather than merely

identifying it as one of twelve factors the bankruptcy court

needed to consider and weigh. 

Our analysis is supported by Schulman v. California

(In re Lazar), 237 F.3d 967, 981-82 (9th Cir. 2001). Lazar, like

Security Farms, involved an action removed from state court to

the bankruptcy court. Lazar followed Security Farms and

generally held that, as a consequence of the removal, no state

court action thereafter existed, so both 28 U.S.C. § 1334(c)(1)

permissive abstention and 28 U.S.C. § 1334(c)(2) mandatory

abstention were unavailable. Lazar, 237 F.3d at 981-82.

In a footnote, Lazar acknowledged Eastport Assocs. and

pointed out that Eastport Assocs. applied the Tucson Estates

twelve-factor test for determining the propriety of permissive

abstention even though no state proceeding had been commenced. 

Lazar, 237 F.3d at 982 n.17. Instead of treating Security Farms

and Eastport Assocs. as being in conflict, Lazar harmonized the

two by effectively limiting its holding (and Security Farms’

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holding) to actions removed to the bankruptcy court under

28 U.S.C. § 1452(a). Lazar, 237 F.3d at 982 n.17.

Here, Security Farms does not apply because the action in

the bankruptcy court was not a removed state court action. Thus,

we reject CM Reed Almeda’s argument that the bankruptcy court’s

grant of discretionary abstention was fatally defective in the

absence of a pending state action on the parties’ tax dispute.7

4. Tucson Estates Factor 5 – Alternate Bases For Federal

Jurisdiction

The bankruptcy court stated that § 505 was jurisdictional in

nature and provided an alternate ground for federal jurisdiction

in addition to 28 U.S.C. § 1334(b). See generally Mantz v. Cal.

State Bd. of Equalization (In re Mantz), 343 F.3d 1207, 1211 (9th

Cir. 2003) (describing § 505 as a jurisdictional grant of

authority). Nonetheless, the bankruptcy court concluded that, to

the extent the existence of an alternate ground for federal

jurisdiction ordinarily might weigh against abstention, this

weight was offset by the plain language of § 505, which makes the

exercise of jurisdiction under § 505 permissive rather than

mandatory. 

7This Panel previously held in In re Bankruptcy Petition

Preparers Who Are Not Certified Pursuant to Requirements of

Arizona Supreme Court, 307 B.R. at 140, that Security Farms’

holding only applied to mandatory abstention requests. It is

difficult to reconcile Bankruptcy Petition Preparers with Lazar,

which held that both permissive and mandatory abstention

doctrines are unavailable in actions removed from state court. 

Because we hold that Lazar supports the bankruptcy court’s

application of discretionary abstention, we need not further

address here the apparent tension between Lazar and Bankruptcy

Petition Preparers.

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On appeal, CM Reed Almeda completely ignores the bankruptcy

court’s Tucson Estates Factor 5 analysis and merely states “No

other basis for jurisdiction exists.” This statement is wholly

unsupported and does not meaningfully challenge the bankruptcy

court’s analysis. Thus, CM Reed Almeda has not demonstrated that

the bankruptcy court’s assessment of Tucson Estates Factor 5 was

illogical, implausible, or without support in the record.

5. Tucson Estates Factors 7 & 8 – Substance Rather than

Form of “Core” Proceeding and Feasibility of Severing

State Law Claims From Core Bankruptcy Matters

The bankruptcy court did not say much about these two

factors, except to state that “[t]here are no ‘core’ bankruptcy

matters to be severed.” We do not agree with this statement. 

When, as here, tax liability has been asserted in proofs of claim

filed in the bankruptcy case, a § 505 motion seeking a

determination of the debtor’s tax liability falls within the

ambit of 28 U.S.C. § 157(b)(2)(B), which identifies as “core” the

allowance or disallowance of claims against the estate. 

Moreover, the motion “arises under Title 11” because § 505 in

essence creates a “cause of action” for the determination of tax

liability. 28 U.S.C. § 157(a); see also Wilshire Courtyard v.

Cal. Franchise Tax Bd. (In re Wilshire Courtyard), 729 F.3d 1279,

1285 (9th Cir. 2013) (“Proceedings ‘arising under’ title 11

involve causes of action created or determined by a statutory

provision of that title.”).

Nonetheless, even if this tax dispute qualifies as a core

proceeding, this does not necessarily mean that these two Tucson

Estates factors militate against abstention. To the contrary,

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the seventh Tucson Estates factor requires us to focus on the

substance of the “core” proceeding. Here, that substance is a

dispute over taxes arising under state law, which dispute could

and would arise regardless of the intervening bankruptcy case.

And the eighth Tucson Estates factor requires us to focus on the 

existence of state law claims and the feasibility of severing

them “from core bankruptcy matters to allow judgments to be

entered in state court with enforcement left to the bankruptcy

court.”

According to CM Reed Almeda, the absence of a pending state

court action renders it infeasible to sever out the state law tax

claims. We disagree. As the bankruptcy court pointed out, Texas

has an entire system of tribunals and a comprehensive statutory

scheme for resolving disputes concerning ad valorem property

taxes assessed under Texas law. CM Reed Almeda has not offered

any reason why the Texas tribunals are incapable of effectively

and efficiently determining CM Reed Almeda’s tax liability for

2015 and 2016. In fact, the only apparent impediment to

determining this liability in those tribunals is CM Reed Almeda’s

failure and refusal to bring its tax dispute before those

tribunals. 

In short, even though CM Reed Almeda’s § 505 motion

qualified as a core proceeding, the seventh and eighth Tucson

Estates factors still militated in favor of abstention.

6. Tucson Estates Factor 9 – Burden on the Bankruptcy

Court’s Docket

The bankruptcy court did not distinctly articulate the

extent of the burden on its docket that would result from its

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hearing and deciding the § 505 motion. Even so, the bankruptcy

court made a number of observations relevant to this factor. The

court observed that “an evidentiary hearing would be required if

this court were to hear the 505 Motion,” and that “[g]iven this

court’s other commitments, there is no reason to believe that it

could hear and determine the issues the debtor has raised more

efficiently than the state forum.” The court further observed

that CM Reed Almeda had offered no explanation why the court

should need to “start from scratch” in analyzing Texas law

governing the assessment of property taxes and disputes regarding

those assessments, “when there is a more efficient tribunal that

can determine the valuation issues under applicable state law.” 

In effect, the bankruptcy court’s observations amount to a

finding that hearing the § 505 motion would constitute an

unnecessary burden on its docket.

Instead of addressing this burden, CM Reed Almeda on appeal

has merely pointed out that bankruptcy courts frequently address

valuation disputes and has contended that its tax dispute with

Harris County is nothing more than that. CM Reed Almeda’s

appellate argument completely ignored the bankruptcy court’s

concerns that the tax dispute is more complex than CM Reed Almeda

has acknowledged and that the state tax tribunals are better

situated to resolve the dispute more efficiently. Once again,

CM Reed Almeda has not demonstrated that the court’s assessment

of the factor in question was illogical, implausible, or without

support in the record.

7. Tucson Estates Factor 10 – Forum Shopping Concerns

The bankruptcy court stated that it had developed a “strong

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sense” of forum shopping as a result of CM Reed Almeda’s conduct,

particularly its delay in contesting the disputed tax

assessments. In essence, the court reasoned that CM Reed

Almeda’s lack of notice argument did not credibly explain the

extent of the delay; rather, the court inferred from CM Reed

Almeda’s conduct an intent to delay having to pay the tax

liability for as long as possible, which also could explain why

CM Reed Almeda was insistent that the bankruptcy court should

hear and decide the tax dispute.

On appeal, CM Reed Almeda focuses on a different set of

facts and attempts to draw from those facts an inference that

Harris County is forum shopping. CM Reed Almeda ignores the

facts relied upon by the court and the inference of forum

shopping the court drew from those facts. Yet again, CM Reed

Almeda has not demonstrated that the court’s assessment of this

factor was illogical, implausible, or without support in the

record.

8. Tucson Estates Factors 11 & 12 – Jury Trial Rights and

Presence of Non-Debtor Parties

The bankruptcy court effectively found that these two

factors were neutral – that CM Reed Almeda had no jury trial

right and that, regardless of whether additional government

entities needed to be added to the proceeding as necessary

parties, the other Tucson Estates factors justified the court’s

abstention.

At bottom, CM Reed Almeda has done virtually nothing on

appeal to persuade us that the bankruptcy court’s application of

the Tucson Estates factors “was illogical, implausible, or

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without support in inferences that may be drawn from the facts in

the record.” Hinkson, 585 F.3d at 1262–63. Nor is any such

misapplication evident to us. Accordingly, the bankruptcy court

did not abuse its discretion when it decided to abstain from

hearing and deciding the tax dispute with respect to the 2015 and

2016 tax years.

9. CM Reed Almeda’s Other Abstention-Related Arguments

There are only two other issues we need to address. First,

CM Reed Almeda maintains that Harris County forfeited the

abstention issue by filing proofs of claim. CM Reed Almeda has

not supported this novel argument with any legal authority, nor

are we aware of any that would support it. In fact, the notion

that the filing of proofs of claim could strip the bankruptcy

court of its discretion to abstain from hearing a dispute

relating to those claims is wholly inconsistent with Tucson

Estates and its progeny. 

Second, CM Reed Almeda argues that, if abstention were

appropriate with respect to the 2015 and 2016 tax years, it also

should have been appropriate for the 2007 through 2014 tax years. 

This argument is nonsensical and ignores the fact that the

bankruptcy court was able to resolve the tax liability dispute

regarding the 2007 through 2014 tax years by considering the

discrete and relatively straightforward timeliness issue. In

contrast, the tax liability dispute regarding the 2015 and 2016

tax years could not so easily be resolved, and this distinction

in the complexity of the dispute was sufficient, in the

bankruptcy court’s eyes, to justify a different result on the

abstention issue. We cannot say that the bankruptcy court’s

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justification for treating the 2007 through 2014 tax years

differently from the 2015 and 2016 tax years was illogical,

implausible or without support in the record. 

CONCLUSION

For the reasons set forth above, the bankruptcy court’s

order denying CM Reed Almeda’s § 505 motion is AFFIRMED.

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