_____________ No. 95-3039MN

_____________ In re: D & P Partnership; * D & P Partnership II, * * Debtors. * * *

-------------------------- * * Norwest Equipment Finance, Inc.;* Norwest Bank Minnesota Central, * N.A.; Norwest Bank Minnesota, * N.A. (collectively, "Norwest"); * Stearns County National Bank of * Albany (SCNB), * On Appeal from the United * States District Court Appellees, * for the District of * Minnesota. v. * * * Mahendra Nath; Ashok Mehta; * Torchwood Franchise Group, * Inc., * * Appellants. * * * D & P Partnership; D & P * Partnership II, * * Defendants. *

___________ Submitted: May 13, 1996 Filed: July 31, 1996

___________ Before RICHARD S. ARNOLD, Chief Judge, MAGILL and MURPHY, Circuit Judges.

___________

### -2-

RICHARD S. ARNOLD, Chief Judge.
The d efendants in this case, collectively referred to as the Nat h Group, purchased assets from a bankrupt debtor, D & P Partnership. At the time of the purchase, the state of Minnesota imposed a sales tax on such sales, which tax was paid. Subsequently, Minnes ota repealed the sales tax with retroactive appl ication, so that the tax on this sale was subject to a refund. The Bankruptcy Court held that the plaintiffs in this case , secured creditors of D & P, were entitled to the proceeds of that refund. The District Court affirmed. We disagree and reverse.

I.

In Januar y of 1991, D & P filed a Chapter 11 bankruptcy petition
. In time, D & P decide d that a self-directed liquidation of its assets was its best alternative, and its creditors, including the plaintiffs , acquiesce din that decision. The Nath Group and two other entitie s submitted offers to purchase 17 of D & P's Burger King restaurants.
Naturally, the three offers were not identical. D & P put all three offers before the Bankruptcy Court and allowed its creditors to choos e whichoffer they wished to accept. They chose the Nath Group's offer
. Further n egotiation led to an agreement that D & P would relinquish an y clai mto the proceeds of the sale in favor of its creditors. The Nat h Group, in turn, would receive title to the assets free and clear of an y existing liens.

Onthe eve of the hearing at which the Bankruptcy Court would b e asked to approve the agreement, a problem was discovered. The balance in D & P's operating account was not sufficient to pay operating expenses , administrative expenses, and the sales taxes on

### D & P was made a party to the suit, but did not 1 

### participate. -3- the sale if all of the proceeds were paid over to the creditors. In a n attempt to remedy this problem, the Nath Group was asked to increase its offer, which it refused to do. Instead, the cre ditors, plaintiffs in this case, agreed to accep t less and allow part of the proceeds of the sale to be allocated to the newly discovered expenses. This plan met with th e approval of the Bankruptcy Court. The sale was closed on October 31, 1991
. Subse quently, the Nath Group purchased two more restaurants from D & P under an identical ag reement. The required sales taxes were paid over to the state of Minnesota for both sales.
In January of 1992, the sales-tax st atute was amended to exclude the sale of substantially all of the assets of a business from the list o f taxable e vents. Minn. Stat. § 297A.25 Subd. 12 (Supp. 1996). Thi s amendment was retroactive to June 30, 1991, meaning that the sales taxes in this case were sub ject to a refund. D & P applied for the refund, but was denied by the Minnesota Department of Revenu e. It did not appeal that ruling. On the other hand, the Nath Group applied for, and was granted, the refund.
The pla intiffs then sued the Nath Group in the Bankruptcy Court t o have the proceeds of the refund paid over to them, asserting two theories 1 in support of their c laim. First, they argued that the agreement between the p arties required D & P, not the Nath Group, to pay the sales taxes
. Thu s, the refund was property of the estate, and should go to th e plaintiffs as creditors. Second, they argued th at the Nath Group would be unjustlyenriched if it were allowed to keep the refund. The Bankruptcy Court agr eed with both of these theories, and ordered the Nath Group t o relinquish the refund. The District Court affirmed that decision.

### -4- II.
We must f irst decide whether we have subject-matter jurisdiction to hear this case. Generally, once the reorganization plan has bee n confirmed, as D & P's plan has been, the estate of the debtor, and thus th e bankruptcy court's jurisdiction, ceases to exist
. United States v. Unger , 949 F.2d 231, 233 (8th Cir. 1991). However, a bankruptcy court ma y expl icitlyretain jurisdiction over aspects of a plan related to it s administration and interpretation. Id. at 234.

Th e Bankruptcy Court retained jurisdiction over the subject matte r of this lawsuit. Article X of the Plan addresses the continuin g jurisdicti onof the Bankruptcy Court. It reads that the "Court shal l retain jurisdiction until this Plan has been fully consummated" for variou s purposes. Among those purposes are the "interpr etation and enforcement of the terms of this Plan."

We think this settles any jurisdictional question. Certain fund s were paid into the ba nkruptcy estate by the Nath Group. Those funds were to be used to pay sales taxes and the plaintiffs , among other things. The state of Minnesota saw fit to change its law and refund the sales taxes. The plain tiffs now argue that the "terms of this Plan" require the Nat h group to pay the refund to the debtor so that it can be turned over t o them. We do not see what could more clearly be a matter of "interpretatio n andenforcement of this plan" over which the Bankruptcy Court retaine d jurisdiction than is the plaintiffs' request. W e hold that the Bankruptcy Court, and this Court, have jurisdiction over the subject matter of this case.

III.

We turn, then, to the merits of this case. At the outset, it i s important to realize that the plaintiffs are not claiming that

### -5-

they are entitled to the tax refund under the refund statute, Minn. Stat. § 289A.50 (Supp. 1996). Indeed, the Supreme Court of Minnesota has made it clear that purchasers, not sellers, are entitled to tax refunds. See Acton Construction Co . v. Commissioner of Revenue , 391 N.W.2d 828, 832-33 (Minn. 1986); Minn. Stat. § 289A.50, subd. 2. T hus, the interpretation of the Min nesota statute is not before us. Under the statute, there is n o doubt that the Nath group has a right to the refund. We must interpret th e terms of the contract between the parties and apply the equitable principl e of unjust enrichment to determine whether either one requires the Nat h Group to surrender the proceeds of the refund to the plaintiffs, lega l questions over which we exercise plenary review. The gravamen of the plaintiffs' argument is that the contract b etween the parties shifted the responsibility of fundin g the sales taxes from the buyer, the Nath Group, to the seller, D & P and its creditors. The Nath Group, it is argued, intended to part forever with the total purchas e price, and had no int erest in how those funds were utilized. It follows, then, that any refund would belong to the bankruptcy estate because th e estate "p aid" the sales taxes. In other words, it is argued that th e contract between the parties mandates that the seller is entitled to the refund. See Acton , 391 N.W.2d at 832 n.5.
Several p ortions of the writings between the parties are important. In paragraph 2.1 of the Asset Purchase Agreement , the Nath Group agrees to paya set amount for the assets. Paragraph 1.5, the critical portion of the writings for present purposes, reads that
The purc hase price payable by the Buyers as set forth i n section 2.1 is inclusive of any sales or use tax payable
. Sel lers agree to pay any sales tax owing, however, Seller s shal l pay such sales tax from the proceeds of the Purchas e Price (as defined in Section 2.1). Accordingly,

### Identical documents were executed for both the 17- 2 

### restaurant sale and the two-restaurant sale. -6- the dollar amounts distributed to the Sellers' desi gnees may be reduced to pay any sales tax owing.
Fin ally, the Stipulation Relating to Sale Proceeds, Settlement o f Administrative Claim and Transfer of Franchises (the Stipulation) provides that D & P "shall receive no proceeds from the sale and shall be liable fo r any expenses of the Sale," including sales taxes. 2
This language at most does nothing to change the statutor y presumption that purc hasers pay sales taxes and are consequently entitled to refun ds when the taxes are repealed. Arguably, it refutes th e plaintiffs' argument altogether. Paragraph 2.1 establishes the purchase price. That price, according to paragraph 1.5, includes sales taxes. The seller is directed to remit those taxes to the state. As a consequence, the funds distributed to the plaintiffs were reduced. This language, as we read it, says the Nath Group "paid" the sales taxes by providing th e funds to meet that li ability. The seller merely passed those funds on to the state.
The plaintiffs ask us to look outside the agreement in order t o bolster their argument. First, as the plaintiffs' lawyer pointed out at oral argument, this sale was not a typical sale between willing parties on the ope n market. It was a self-directed liquidation of the assets of a bankrupt debtor. Thus, the plaintiffs, as creditors, were merely trying to minimize losses. Second, when the funding shortfall w as discovered the Nath Group was asked to increase its offer. Its reply was that the offer on the table wa s what it was willing to pay for the business, and all that it was willing to pay. Moreover, the chairman of the

### -7-

NathGroup commented, in a deposition, that he never contemplated paying an additional amount for sales taxes when he formulated his offer. These facts, we are told, show that the Nath Group int ended to part forever with the purchase price and leave the plaintiffs with the responsibility o f coping with any new expenses that might arise. Finally , the plaintiffs remind us that they were the ones who wer e forced to sacrifice funds when the shortfall was discovered. They gave up a po rtion of the proceeds in order to facilitate the sale. If some o f those proceeds are to be returned, it is only fa ir that they, not the Nath Group, recoup those funds.
These additional facts do nothing to alter our conclusion. W e recognize that the Nath Group is recouping funds that it never expected to recoup when it parted with them, but so would the plaintiffs if we hel d that they were entitled to the refund. The Minn esota statute entitles the Nath Group to a refund of the sales taxes. At minimum, there is n o provision in the contract that changes that outcome.
Thi s reasoning also disposes of the plaintiffs' unjust-enrichmen t claim. Under the Minnesota precedents, unjust enrichment occurs when one party enriches himself at the expense of another illegally or inequitably. See Christle v. Marberg , 421 N.W.2d 748, 751 (Mi nn. App. 1988). Here, the plaintiffs argue that the Nath Group's action in retaining the refund is unlawful because it violates the terms of the contract. We have already held that, at a minimum, the contract is not contradicted by allowing the Nath Group to retain the refund. Thus, to do so cannot be unlawful and th e unjust -enrichment claim must be rejected. There is nothing inequitabl e about allocating money in accordance with a statute, and in a manner not contrary to the parties' agreement.

IV.

### -8- The judgm ent of the District Court, affirming the Bankruptcy Court, is reversed. The Nath Group is entitled to reta in the proceeds of the tax refund, and the Bankruptcy Court, on remand, is instructed to ente r judgment accordingly.
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.