Opinion ID: 771177
Heading Depth: 2
Heading Rank: 2

Heading: Trustee is time-barred from exercising her avoidance powers

Text: 19 Under S 549(d), the Trustee had two years from the date of the transfer sought to be avoided to commence an avoidance proceeding. She initiated the first adversary proceeding on September 24, 1991. The bankruptcy court found that the consolidated tax return was filed on September 19, 1989, the date it was received by the IRS. 8 Because the Trustee did not commence an action to exercise her avoidance powers until September 24, 1991 -more than two years after the transfer, i.e., the date the return was filed, on September 19, 1989 -the action is barred by the limitations period ofS 549(d).
20 The Trustee contends on appeal that the date of filing under the IRC is not necessarily the same as the date of transfer for the purposes of 11 U.S.C. S 549(d). Relying on Spear v. CEMA Distrib. (In re Rainbow Music, Inc.), 154 B.R. 559, 561-62 (Bankr. N.D. Cal. 1993), which held that a check is not transferred for purposes of S 549 until is it honored, the Trustee argues that the tax return was not transferred as a matter of law until it was received and processed by the IRS. As the Trustee notes, the government did not offer any evidence below as to when it actually processed the consolidated tax return relinquishing the carryback period for the Debtors' NOLs. There is no indication in the record, however, that the Trustee presented this argument before either the bankruptcy court or the district court. We therefore find the argument waived and express no view as to its merit. See Alexopulos v. Riles, 784 F.2d 1408, 1411 (9th Cir. 1986) (holding that plaintiff's tolling argument was waived for failure to raise the issue in opposition to summary judgment even though the general statute of limitations issue had been briefed). 21 This court has recognized that absent exceptional circumstances, we generally will not consider arguments raised for the first time on appeal, although we have discretion to do so. El Paso City v. America West Airlines, Inc. (In re America West Airlines, Inc.), 217 F.3d 1161, 1165 (9th Cir. 2000). Exceptional circumstances exist when: (1) review will prevent a miscarriage of justice; (2) a change in the law raises a new issue pending appeal; and (3) the issue presented is purely one of law and either does not depend upon the factual record developed below, or the pertinent record has been fully developed. Marx v. Loral Corp., 87 F.3d 1049, 1055 (9th Cir. 1996). None of these exceptional circumstances exists here. Although determination of the appropriate date of transfer from which to measure the limitations period underS 549(d) is purely a matter of law, the factual record has not been developed below as to when the tax return was actually processed. Because the United States would be prejudiced by not having had the opportunity to so develop the record if we were to entertain the Trustee's new argument on appeal, this case is not appropriate for such exercise of our discretion. See United States v. Gabriel, 625 F.2d 830, 832 (9th Cir. 1980) (This exception necessarily applies only when the party against whom the issue is raised would not be prejudiced and would not have tried his case differently either by developing new facts in response to or advancing distinct legal arguments against the issue.).
22 The principles of equitable estoppel do not prevent the government from asserting that the Trustee's exercise of her avoidance powers is barred by the statute of limitations under S 549(d). The Trustee points to two communications from the government in arguing for estoppel: (1) the September 17, 1991, letter stating that the Trustee's return had been accepted as filed; (2) the September 24, 1992, notice of disallowance stating that the Trustee had two years from the date of mailing to file suit. Neither communication supports a finding of equitable estoppel. 23 With respect to the letter of September 17, 1991, the IRS properly considered the Trustee's amended return as a claim for a refund but did not address the separate and distinct avoidance claim upon which the refund action was necessarily predicated. Moreover, an informal letter from the IRS that a return has been accepted as filed has no conclusive bearing on whether a claim for a refund is ultimately granted. See Shumaker v. Commissioner, 648 F.2d 1198, 1199-1200 (9th Cir. 1981) (Neither the informal acceptance of Shumaker's amended returns nor the adjustments to his tax crediting him with the amount in controversy constitute a binding agreement under the tax laws.). This understanding would appear to be confirmed by language in the subsequent Settlement entered by the Trustee on December 12, 1991, which noted that [t]he IRS has not yet approved or denied the tax refund claim. 24 The Trustee, however, points to cases holding that taxpayers may rely on the written, and even oral, representations of IRS employees. See, e.g., Haber v. United States, 831 F.2d 1051, 1053-54 (Fed. Cir. 1987) (taxpayer had right to rely on IRS oral representation to taxpayer's accountant that prior notice of disallowance had been withdrawn, so that later notice of disallowance initiated period for filing refund suit). There is nothing in the record here, however, to suggest that the Trustee actually relied upon the letter of September 17 in deciding not to file suit before September 19 -when the two year statute of limitations under S 549(d) expired -but nevertheless deciding to file suit a week later on September 24, 1991. See Watkins v. United States Army, 875 F.2d 699, 709 (9th Cir. 1989) (en banc) (noting requirement that party seeking estoppel is required to show that he relied to his detriment on conduct of the party that is to be estopped). Similarly, the Trustee could not possibly have relied on the September 24, 1992, notice of disallowance in missing the deadline for claiming avoidance under S 549 when that letter was sent more than a year after the deadline had passed (because, of course, that notice referred solely to the refund claim, as opposed to the predicate avoidance claim that was already barred). For the foregoing reasons, we conclude that equitable estoppel does not apply.