Court Opinion

ID: 8984826
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:40:23.852454+00
Date Added: 2024-06-11T17:10:45.686180
License: Public Domain

WEIS, Circuit Judge,
concurring and dissenting.
I dissent from the part of the majority ruling that denies recognition for the tax claims for the year 1982-83. The central issues as to those claims, the interpretation of New York State law and its correlation with the Bankruptcy Code, were decided favorably to local governments by the Court of Appeals for the Second Circuit in In re Parr Meadows Racing Ass’n., Inc., 880 F.2d 1540 (2d Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 869, 107 L.Ed.2d 953 (1990). In my view, critical considerations of judicial administration and consistent application of federal law require this Court to defer to the holding in Parr Meadows.
As the majority explains, an exception to the automatic stay provision, 11 U.S.C. § 362(a)(4), is provided by 11 U.S.C. § 546(b). The latter proviso allows perfection, after the automatic stay provision has been triggered, by operation of “any generally applicable law that permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of such perfection.” To be specific, in this case the issue is whether the local governments had “an interest in property” before August 9, 1982, the date the petition in bankruptcy was filed. The majority answers in the negative, despite the holding in Parr Meadows which would dictate a contrary result.
The majority recognizes that the reference in section 546(b) to “any generally applicable law” calls for an interpretation of the New York statutes granting taxation power to local governments. The Parr Meadows Court undertook that task and, after scrutinizing the legislation and state case law, held that the county acquired an “interest” on the “tax status” date (in that instance, June 1, 1979), twelve days before the bankruptcy petition was filed. 880 F.2d at 1548. That was the Court’s holding even though the “lien” was not “perfected,” according to the tax statute, until December 1, 1979. Id.
According to the Court, “All assessment of property occurs as of that date [tax status date], and from that time forward, the county has a real and identifiable interest in the property which cannot be erased or altered by subsequent events.” Id. The local government uses the tax status date as the reference point for determining whether the property is taxable and, if so, its valuation. That value is the basis for all taxes due for the year and may not be altered, even though the use or condition of the property may change dramatically before the date the taxes are actually assessed. Spiegel v. Bd. of Assessors, 555 N.Y.S.2d 811, 812 (App.Div.1990). The purpose of this hard and fast rule is to achieve “stability and certainty in the tax struc*897ture” because “budgetary requirements ... are predicated on the assessment roll.” Id.
The factual scenario in Parr Meadows presented precisely the same legal issues as in the appeal presently before us. The majority, however, disagrees with the Parr Meadows opinion on the ground that the New York tax statutes do not mention a “relation back” to the tax status date and that the “liens” are not created until December 1st of each year. In support of this conclusion the majority cites Equibank N.A. v. Wheeling-Pittsburgh Steel Corp., 884 F.2d 80 (3d Cir.1989). This reliance is puzzling because in Equibank the Court was applying the tax law of West Virginia, not New York. Id. at 85-86.
It is pertinent to note at this point that section 546(b) does not use the word “lien,” but requires the acquisition of an “interest” before the bankruptcy petition was filed. Parr Meadows recognized the distinction between “interest” and “lien” and commented that the attachment of a lien was merely one of several steps to be taken “towards the completion of the taxation process and the perfection of the county’s interest in the property.” Parr Meadows, 880 F.2d at 1547.
Any doubt that the Parr Meadows appellate Court was aware of the “relation back” issue, is dispelled by reviewing the opinion of the district court from which the appeal was taken. In denying the application of section 546(b) to the 1979-80 taxes, the Parr Meadows district court observed, “[njoticeably absent from this provision [the state tax statute] is any language providing that such tax lien will be deemed perfected as of a date earlier than the date the taxes become due and payable. The most reasonable interpretation of the Suffolk County Tax Act is that it creates a tax lien as of the date the property taxes are due, and that that lien is also automatically perfected as of the date the taxes become due.” In re Parr Meadows Racing Ass’n., Inc., 92 B.R. 30, 34 (E.D.N.Y.1988). The district court then proceeded to discuss legislative history and other bankruptcy courts’ decisions.
The Court of Appeals reversed the district court holding and stated, “contrary to the holdings in the district court and the bankruptcy courts, the lien for the 1979-80 tax years is also valid.” Parr Meadows, 880 F.2d at 1548. “[W]e are satisfied that, under New York tax law, the county did have an interest in the racetrack property before the taxes thereon actually became due and payable and the lien attached.” Id. at 1546. The majority here espouses the same view of the New York statute that the district court adopted in Parr Meadows and Court of Appeals rejected.
The majority’s refusal to accept Parr Meadows holding on the “relation back” factor is a flat disagreement on the interpretation of state law. Because New York is within the geographic boundaries of the Second Circuit, I willingly accept the fact that the Court of Appeals for that circuit has greater familiarity with the law of that state than does our court. Certainly in the event of doubt, deference is due the Second Circuit’s reading of local law.
The Supreme Court generally accepts interpretations of state law by Courts of Appeals. “Normally, however, we defer to the construction of a state statute given it by the lower federal courts. We do so ... to reflect our belief that district courts and courts of appeal are better schooled in and more able to interpret the laws of their respective States.” Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 499-500, 105 S.Ct. 2794, 2799-2800, 86 L.Ed.2d 394 (1985); see also Frisby v. Schultz 487 U.S. 474, 482, 108 S.Ct. 2495, 2500-01, 101 L.Ed.2d 420 (1988).
I see no reason why a similar practice of deference should not be followed by the Courts of Appeals as to other Courts of Appeals. It is cause for serious concern when Courts of Appeals deliberately differ on interpretations of federal law, an area in which they are equally competent. See Report of the Federal Courts Study Committee 124-25 (1990). To disagree on questions of state law with courts which have greater familiarity with the pertinent statutes has even less to commend it. It is surely anomalous that Courts of Appeals *898which extend deference to interpretations of law by administrative agencies do not do so to sister appellate courts created under Article III to decide legal issues. See Grocery Town Market, Inc. v. United States, 848 F.2d 392, 396 (3d Cir.1988) (“it is well settled that the Secretary’s interpretation of a statute he is charged with enforcing is entitled to substantial deference”); Smith v. Fidelity Consumer Discount Co., 898 F.2d 907, 914 (3d Cir.1990) (“an agency’s ‘interpretation of a statute [it] is charged with enforcing is entitled to substantial deference’ ... [w]e are thus bound to give deference to this permissible interpretation”).
The Bankruptcy Code is national law and should be applied uniformly by the federal courts. When Congress wished to allow variation dependent on state law, it made that point specifically. It did so here to the extent of incorporating state law into section 546(b). That, however, does not mean that Congress envisioned disparity in the interpretation of an identical state statute by various federal courts.
This court’s failure to defer to the Parr Meadows holding means that municipalities and counties in New York governed by the same state statutes are treated differently depending on the location of the bankruptcy court in which the proceeding is filed. This result frustrates Congress’ intent to have the Bankruptcy Code interpreted in the same way in all parts of the country. I would therefore follow the holding of the Court of Appeals in the Parr Meadows case and reverse the judgment of the district court insofar as it affects taxes for the year 1982-83.