Court Opinion

ID: 4163991
Source: CourtListenerOpinion
Date Created: 2017-04-27 17:04:18.441944+00
Date Added: 2024-06-11T14:37:57.612827
License: Public Domain

FILED
 1                         NOT FOR PUBLICATION              APR 26 2017

 2                                                      SUSAN M. SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                         )     BAP No.     NV-16-1173-KuLJu
                                    )
 6   CM REED ALMEDA 1-3062, LLC,    )     Bk. No.     2:13-bk-19117
                                    )
 7                  Debtor.         )
     _______________________________)
 8                                  )
     CM REED ALMEDA 1-3062, LLC,    )
 9                                  )
                    Appellant,      )
10                                  )
     v.                             )     MEMORANDUM*
11                                  )
     HARRIS COUNTY,                 )
12                                  )
                    Appellee.       )
13   _______________________________)
14                      Submitted Without Oral Argument
                              on February 24, 2017
15
                             Filed – April 26, 2017
16
              Appeal from the United States Bankruptcy Court
17                      for the District of Nevada
18        Honorable Gary A. Spraker, Bankruptcy Judge, Presiding
19   Appearances:     Gerald M. Gordon and Mark M. Weisenmiller of
                      Garman Turner Gordon LLP and Douglas S. Draper of
20                    Heller, Draper, Patrick, Horn & Dabney, L.L.C. on
                      brief for appellant CM Reed Almeda 1-3062, LLC;
21                    Jeanette E. McPherson of Schwartzer & McPherson
                      Law Firm and John P. Dillman of Linebarger Goggan
22                    Blair & Sampson, LLP on brief for appellee Harris
                      County.
23
24   Before: KURTZ, LAFFERTY and JURY, Bankruptcy Judges.
25
26        *
           This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1                                INTRODUCTION
 2        Chapter 111 debtor CM Reed Almeda 1-3062, LLC appeals from
 3   an order denying its motion under § 505 to determine its ad
 4   valorem property tax liability.    With respect to property taxes
 5   assessed between 2007 and 2009, the bankruptcy court held that
 6   CM Reed Almeda lacked standing because it did not own the
 7   property at the time the taxes were assessed.   As for all
 8   property taxes assessed in 2014 and before, the bankruptcy court
 9   held that § 505 barred it from determining CM Reed Almeda’s tax
10   liability because the time to challenge those taxes had expired
11   under applicable nonbankruptcy law before CM Reed Almeda filed
12   its motion.   Finally, concerning 2015 and 2016 taxes, the
13   bankruptcy court ruled that it would exercise its discretion to
14   abstain.
15        We agree with the bankruptcy court’s determination that
16   CM Reed Almeda’s request for a determination of its tax liability
17   for 2014, and all years prior, was time barred.   In addition, we
18   hold that the bankruptcy court did not abuse its discretion in
19   abstaining from hearing and deciding the dispute over 2015 and
20   2016 taxes.
21        Therefore, we AFFIRM.
22                                   FACTS
23        CM Reed Almeda has not challenged the bankruptcy court’s
24   recitation of the basic underlying facts set forth in the court’s
25
          1
26         Unless specified otherwise, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
27   all “Rule” references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037. All “Civil Rule” references are to
28   the Federal Rules of Civil Procedure.

                                       2
 1   memorandum of decision entered on May 31, 2016, so we have relied
 2   on that recitation.
 3        CM Reed Almeda filed its chapter 11 petition in 2013.    Its
 4   sole asset is roughly 16 acres of vacant land in Harris County,
 5   Texas.   The land formerly was used for oil and gas exploration,
 6   but more recently it was platted for residential development.
 7   The land’s former use resulted in environmental issues.
 8   Additionally, numerous property transfers, encumbrances and
 9   foreclosures clouded title.    In 2011, Larry Ramming and Dick
10   Wheeler purportedly acquired the land via a foreclosure.
11   Thereafter, many tax notices were sent to Ramming and Wheeler as
12   the owners of record.
13        At the time of its 2013 bankruptcy filing, CM Reed Almeda
14   claimed ownership of the land.    According to CM Reed Almeda, it
15   filed bankruptcy in order to take advantage of the Bankruptcy
16   Code provision enabling debtors to sell assets free and clear of
17   liens and other interests.    CM Reed Almeda expected to clear
18   title to the land, through a bankruptcy sale.
19        Another issue CM Reed Almeda sought to address in the
20   bankruptcy case was its disputed tax liability to Harris County.
21   Harris County filed two proof of claims asserting secured and
22   priority tax claims.2   The first proof of claim was for
23   prepetition ad valorem real property taxes arising between 2007
24
25        2
           Actually, the tax claims asserted by Harris County were an
26   aggregation of tax liability owed to a variety of city and county
     taxing authorities. For ease of reference and because the
27   identity of the specific taxing authorities is not relevant to
     our analysis or the resolution of this appeal, we collectively
28   refer to these taxing authorities as Harris County.

                                       3
 1   and 2013 in the aggregate amount of $556,275.07.       Harris County
 2   submitted over 400 pages of supporting documentation, consisting
 3   of partial tax statements issued by the Harris County Tax
 4   Assessor-Collector.   The tax statements showed that the taxing
 5   entities had assessed taxes against each subdivided lot rather
 6   than against the land as a whole, and most of the statements
 7   identified Wheeler and Ramming as the “certified owners” of the
 8   land.   None of them identified CM Reed Almeda as certified owner,
 9   nor is there any indication in the proof of claim or the
10   supporting documentation as to whether or when CM Reed Almeda
11   received notice of the tax assessments.
12        Harris County’s second proof of claim was for postpetition
13   ad valorem real property taxes arising in 2014 and 2015 in the
14   aggregate amount of $111,492.52.       The partial tax statements
15   submitted in support of Harris County’s amended postpetition
16   claim are similar to those submitted in support of Harris
17   County’s prepetition claim, inasmuch as they identify Wheeler and
18   Ramming as the “certified owners” of the property and none of
19   them identify CM Reed Almeda as the certified owner.
20        To challenge Harris County’s tax claims, CM Reed Almeda
21   filed a motion under § 505 asserting that taxes were improperly
22   assessed against its land and that it did not receive notice of
23   the taxes assessed.   Harris County opposed the motion.      Harris
24   County argued in relevant part that CM Reed Almeda lacked
25   standing to challenge the taxes imposed for 2007 through 2009
26   because CM Reed Almeda did not own the land at the time.       Harris
27   County also argued that the time period for disputing the tax
28   liability had expired and alternately argued that the bankruptcy

                                        4
 1   court should abstain from hearing the tax dispute.
 2        After holding a hearing on CM Reed Almeda’s motion, the
 3   bankruptcy court issued a memorandum decision, which held in part
 4   that the court lacked authority under § 505(a) to determine
 5   CM Reed Almeda’s tax liability and abstained in part from
 6   resolving the dispute.   For taxes incurred between 2007 and 2009,
 7   the bankruptcy court reasoned that CM Reed Almeda lacked standing
 8   under Texas law to challenge those taxes because CM Reed Almeda
 9   did not own the land at the time the taxes were incurred.
10        For taxes incurred between 2010 and 2014, the bankruptcy
11   court ruled that CM Reed Almeda’s challenge was untimely.        The
12   court pointed out that § 505(a)(2)(C) prohibits the bankruptcy
13   court from considering the debtor’s challenge to ad valorem
14   property taxes if the applicable period under nonbankruptcy law
15   for challenging the taxes had expired.3      The court interpreted
16   state tax law in concluding that CM Reed Almeda was time barred
17   both from directly challenging the taxes assessed and from
18   complaining that it did not receive notice of the taxes assessed.
19        For taxes incurred in 2015 and 2016, the bankruptcy court
20   concluded that it would abstain.       The court set forth two
21   alternate abstention tests for resolving discretionary abstention
22
          3
23         The bankruptcy court further ruled that the critical date
     for purposes of determining timeliness was the date CM Reed
24   Almeda filed its § 505 motion and that § 108(a) did not apply to
     extend any state-law-imposed deadlines for disputing ad valorem
25   property tax liability. CM Reed Almeda has not challenged these
26   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)
27   (declining to address matters not specifically and distinctly
     discussed in the appellant’s opening brief); Brownfield v. City
28   of Yakima, 612 F.3d 1140, 1149 n.4 (9th Cir. 2010) (same).

                                        5
 1   issues: one that has been used outside the Ninth Circuit
 2   specifically to resolve the question of whether the bankruptcy
 3   court should exercise its discretion under § 505 to determine the
 4   debtor’s tax liability and another that is the prevailing Ninth
 5   Circuit test used to resolve discretionary abstention questions
 6   arising under 28 U.S.C. § 1334(c)(1).         Under either test, the
 7   court determined discretionary abstention was appropriate.4
 8          The bankruptcy court entered its order denying CM Reed
 9   Almeda’s § 505 motion on May 31, 2016, and CM Reed Almeda timely
10   appealed.
11                                  JURISDICTION
12          The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
13   §§ 1334 and 157(b)(2)(A), (B) and (O), and we have jurisdiction
14   under 28 U.S.C. § 158.
15                                     ISSUES
16   1.     Was CM Reed Almeda’s § 505 motion untimely?
17   2.     Did the bankruptcy court abuse its discretion in deciding to
18          abstain from determining CM Reed Almeda’s tax liability for
19          2015 and 2016?
20                               STANDARDS OF REVIEW
21          The bankruptcy court’s determination that CM Reed Almeda’s
22   § 505 motion should be denied as untimely turned on its
23   interpretation and application of the Bankruptcy Code and Texas
24   law.       We review these matters de novo.    Rund v. Bank of Am. Corp.
25
26          4
           The bankruptcy court further stated that, to the extent its
27   rulings regarding the taxes incurred between 2007 and 2014 turned
     out to be incorrect, its abstention ruling would apply to those
28   taxes as well.

                                          6
 1   (In re EPD Inv. Co., LLC), 523 B.R. 680, 684 (9th Cir. BAP 2015).
 2        The bankruptcy court’s permissive abstention ruling is
 3   reviewed for an abuse of discretion.       In re Bankr. Petition
 4   Preparers who are not Certified Pursuant to Requirements of Ariz.
 5   Sup. Ct., 307 B.R. 134, 140 (9th Cir. BAP 2004).       A bankruptcy
 6   court abuses its discretion if it fails to identify or apply the
 7   correct legal rule or its application of the correct legal rule
 8   was “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support
 9   in inferences that may be drawn from the facts in the record.’”
10   Yellow Express, LLC v. Dingley (In re Dingley), 514 B.R. 591, 596
11   (9th Cir. BAP 2014) (citing United States v. Hinkson, 585 F.3d
12   1247, 1262–63 (9th Cir. 2009) (en banc)).
13        Similarly, findings of fact made in the course of the court
14   exercising its discretion are reviewed under the clearly
15   erroneous standard and are not clearly erroneous unless they were
16   illogical, implausible or without support in the record.
17   Hinkson, 585 F.3d at 1261-62 & n.21.
18                                 DISCUSSION
19   A.   Timeliness Issue
20        The Bankruptcy Code authorizes the bankruptcy court to
21   determine the debtor’s liability for taxes unless they were
22   adjudicated prepetition “by a judicial or administrative tribunal
23   of competent jurisdiction.”    § 505(a)(1), (a)(2).     With respect
24   to ad valorem property taxes, the Code restricts the bankruptcy
25   court’s authority by prohibiting the court from determining the
26   debtor’s tax liability when the period “under applicable
27   nonbankruptcy law” for challenging the amount of taxes has
28   expired.   § 505(a)(2)(C).

                                       7
 1        In turn, Texas law generally permits property owners to
 2   protest ad valorem property tax assessments until the later of
 3   June 1 of the tax year in question or until 30 days after the
 4   date notice was delivered to the property owner, whichever is
 5   later.   Texas Tax Code § 41.44(a)(2).   More importantly for this
 6   appeal, a tax protest based on a failure to receive proper notice
 7   must be filed no later than the date the taxes become delinquent.
 8   Texas Tax Code § 41.44(c); see also Heritage Operating, L.P. v.
 9   Barbers Hill Indep. Sch. Dist., 496 S.W.3d 318, 325 (Tex. Ct.
10   App. 2016) (“A property owner is not entitled to have the
11   lack-of-notice protest heard and determined unless, before the
12   taxes become delinquent, the property owner files the notice of
13   protest . . . .”).   While taxes generally become delinquent on
14   February 1 of the year following the year in which the taxes were
15   imposed, Texas Tax Code § 31.02(a), there is a special, extended
16   delinquency date for purposes of a notice-based tax protest:
17              . . . a property owner who files a [notice-
                based] protest under Section 41.411 on or
18              after the date the taxes on the property to
                which the notice applies become delinquent,
19              but not later than the 125th day after the
                property owner, in the protest filed, claims
20              to have first received written notice of the
                taxes in question, is entitled to a hearing
21              solely on the issue of whether one or more
                taxing units timely delivered a tax bill. If
22              at the hearing the appraisal review board
                determines that all of the taxing units
23              failed to timely deliver a tax bill, the
                board shall determine the date on which at
24              least one taxing unit first delivered written
                notice of the taxes in question, and for the
25              purposes of this section the delinquency date
                is postponed to the 125th day after that
26              date.
27   Texas Tax Code § 41.44(c-3) (emphasis added).
28        The bankruptcy court, here, effectively determined that,

                                      8
 1   pursuant to § 505(a)(2)(C), it lacked authority to determine
 2   CM Reed Almeda’s liability to Harris County for tax years 2007
 3   through 2014 because CM Reed Almeda did not timely challenge
 4   these tax assessments and did not timely complain of the absence
 5   of written notice of these taxes.5   In relevant part, the
 6   bankruptcy court explained that Texas Tax Code § 41.411 is the
 7   exclusive remedy for contesting the notice given of tax
 8   assessments and that, under Texas Tax Code § 41.44(c-3), Harris
 9   County’s proofs of claim had been sufficient notice of the taxes
10   to cause the 125-day extension period to begin to run.    Because
11   CM Reed Almeda’s § 505 motion was not filed within 125 days of
12   the filing of Harris County’s proofs of claim, the § 505 motion
13   was time-barred for the 2014 tax year and for all tax years prior
14
15        5
           For the tax years 2007, 2008 and 2009, the bankruptcy court
16   actually ruled that CM Reed Almeda lacked standing to dispute
     these taxes because it did not own the land at the time the taxes
17   were imposed. Citing Houston Land & Cattle Co. v. Harris Cnty.
     Appraisal Dist., 104 S.W.3d 622, 625 & n.2 (Tex. Ct. App. 2003),
18   the bankruptcy court held that only the owner of the property at
19   the time the assessment was made has standing to contest either
     that assessment or an alleged lack of notice of that assessment.
20   Read as a whole, Houston Land & Cattle Co. arguably might be
     better interpreted as a forfeiture case rather than a standing
21   case. That is to say, because the prior owners had forfeited any
     rights to contest the appraisals or lack of notice thereof, the
22
     prior owners had no surviving challenge rights that they could
23   have passed to a successor owner. Id. at 623-25.

24        In any event, CM Reed Almeda has not challenged the
     bankruptcy court’s “standing” holding on appeal. Moreover, even
25   if CM Reed Almeda had challenged this holding, it would be
26   unnecessary for us to review it because the bankruptcy court’s
     timeliness ruling adequately supports its denial of the § 505
27   motion for the 2007, 2008 and 2009 tax years. We can affirm on
     any ground supported by the record. Fresno Motors, LLC v.
28   Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014).

                                     9
 1   to 2014.
 2        On appeal, CM Reed Almeda has not disputed that, before it
 3   filed its § 505 motion, the time had expired directly to
 4   challenge the 2007 through 2014 tax assessments.    Nor has CM Reed
 5   Almeda challenged on appeal the bankruptcy court’s determination
 6   that Texas Tax Code § 41.411 is the exclusive remedy available to
 7   contest notice of taxes assessed.   See Heritage Operating, L.P.,
 8   496 S.W.3d at 323 (citing Texas Tax Code § 42.09 and stating
 9   “[a]ny ground of protest that the Code authorizes can be
10   adjudicated only by the procedures it prescribes”); Houston Land
11   & Cattle Co., 104 S.W.3d at 624 (citing Texas Tax Code § 42.09
12   and stating “[t]he Tax Code provides the exclusive remedy for
13   adjudication of property tax protests.”).    Nor has CM Reed Almeda
14   argued that its alleged failure to receive notice: (1) affected
15   the validity of the tax assessments or the underlying appraisals,
16   or (2) absolved it of an affirmative duty to contest the tax
17   assessments or the underlying appraisals.    See Denton Cent.
18   Appraisal v. CIT Leasing, 115 S.W.3d 261, 265-66 (Tex. Ct. App.
19   2003); see also Texas Tax Code § 25.19(d).
20        CM Reed Almeda specifically and distinctly argues only one
21   timeliness issue in its appeal brief – that the bankruptcy court
22   erred when it held that Harris County’s proofs of claim
23   constituted sufficient notice of the taxes assessed to trigger
24   the 125-day extension period under Texas Tax Code § 41.44(c-3).
25   Without citing any authority in support, CM Reed Almeda argues
26   that the type of “written notice” referenced in Texas Tax Code
27   § 41.44(c-3) is the same type of “written notice” required under
28   Texas Tax Code § 25.19, which specifies the type of notice the

                                    10
 1   chief appraiser must give property owners when (inter alia) the
 2   appraised value of the taxed property increases from the prior
 3   year.   Texas Tax Code § 25.19(a).   Such notice generally must
 4   include:
 5        (1) a list of the taxing units in which the property is
          taxable;
 6
          (2) the appraised value of the property in the
 7        preceding year;
 8        (3) the taxable value of the property in the preceding
          year for each taxing unit taxing the property;
 9
          (4) the appraised value of the property for the current
10        year, the kind and amount of each exemption and partial
          exemption, if any, approved for the property for the
11        current year and for the preceding year, and, if an
          exemption or partial exemption that was approved for
12        the preceding year was canceled or reduced for the
          current year, the amount of the exemption or partial
13        exemption canceled or reduced;
14        (5) if the appraised value is greater than it was in
          the preceding year, the amount of tax that would be
15        imposed on the property on the basis of the tax rate
          for the preceding year;
16
          (6) in italic typeface, the following statement: “The
17        Texas Legislature does not set the amount of your local
          taxes. Your property tax burden is decided by your
18        locally elected officials, and all inquiries concerning
          your taxes should be directed to those officials”;
19
          (7) a detailed explanation of the time and procedure
20        for protesting the value;
21        (8) the date and place the appraisal review board will
          begin hearing protests; and
22
          (9) a brief explanation that the governing body of each
23        taxing unit decides whether or not taxes on the
          property will increase and the appraisal district only
24        determines the value of the property.
25   Texas Tax Code § 25.19(b).
26        However, nothing on the face of Texas Tax Code § 41.44(c-3)
27   or in the context in which it uses the term “written notice”
28   supports CM Reed Almeda’s assertion that the two Texas Tax Code

                                     11
 1   statutes require the same type of notice.    To the contrary, Texas
 2   Tax Code § 41.44(c-3) was drafted to address a specific, narrow
 3   due process defect in the prior version of the Texas Tax Code
 4   that sometimes left some property owners without any remedy when
 5   the property owner received no notice of the taxes assessed
 6   before they became delinquent.    See Heritage Operating, L.P.,
 7   496 S.W.3d at 325 (citing Indus. Commc’ns, Inc. v. Ward Cty.
 8   Appraisal Dist., 296 S.W.3d 707, 715–17 (Tex. Ct. App. 2009)).
 9   Under Texas law, “due process is satisfied if the taxpayer is
10   given an opportunity to be heard before some assessment board at
11   some stage of the proceedings.”    Denton Cent. Appraisal Dist.,
12   115 S.W.3d at 266.   Because this due process standard sets a
13   relatively low bar for notice requirement purposes, we are not
14   persuaded that the detailed notice requirements of Texas Tax Code
15   § 25.19(b) apply to the notice requirement set forth in Texas Tax
16   Code § 41.44(c-3).   Cf. Rio Valley, LLC v. City of El Paso,
17   441 S.W.3d 482, 492 (Tex. Ct. App. 2014) (citation served in
18   delinquent tax suit was sufficient to constitute “written notice
19   of the taxes” within the meaning of Texas Tax Code § 41.44(c-3)).
20        Harris County’s proofs of claim gave CM Reed Almeda notice
21   of the taxes assessed for each of the tax years between 2007 and
22   2014.   With respect to tax years 2007 through 2013, Harris
23   County’s proof of claim no. 1-1 gave CM Reed Almeda notice of the
24   taxes nearly two years before CM Reed Almeda filed its § 505
25   motion.   As for the 2014 taxes, Harris County’s proof of claim
26   no. 3-1 gave CM Reed Almeda notice of the taxes roughly 150 days
27   before CM Reed Almeda filed its § 505 motion.
28        We need not decide precisely what type of notice is

                                       12
 1   sufficient in every instance to satisfy the due process concerns
 2   underlying Texas Tax Code § 41.44(c-3)’s 125-day window.   It
 3   suffices to say here that Harris County’s proofs of claim were
 4   sufficient to trigger this 125-day notice period, which expired
 5   before CM Reed Almeda filed its § 505 motion.
 6        Therefore, the bankruptcy court correctly held that CM Reed
 7   Almeda’s notice-based tax protest for taxes assessed in 2014 and
 8   before was untimely and correctly concluded that it had no
 9   authority under § 505 to determine CM Reed Almeda’s tax liability
10   for those tax years.
11   B.   Abstention Issue
12        For the 2015 and 2016 tax years, the delinquency date for
13   payment of taxes had not yet occurred, so the period for
14   protesting 2015 and 2016 taxes had not yet closed at the time
15   CM Reed Almeda filed its § 505 motion.   Thus, relief under § 505
16   was not time barred for the 2015 and 2016 tax years.   However,
17   the bankruptcy court relied upon the discretionary abstention
18   doctrine to determine that it would abstain from determining
19   CM Reed Almeda’s tax liability for the 2015 and 2016 tax years.
20        The bankruptcy court applied two different discretionary
21   abstention tests and held that, under either test, discretionary
22   abstention was appropriate.   The first test has been used outside
23   the Ninth Circuit specifically to resolve the question of whether
24   the bankruptcy court should exercise its discretion under § 505
25   to determine the debtor’s tax liability.6   The second test –
26
          6
27         As articulated by the bankruptcy court the factors in the
     first test are:
28                                                      (continued...)

                                     13
 1   enunciated in Christensen v. Tucson Estates, Inc. (In re Tucson
 2   Estates, Inc.), 912 F.2d 1162, 1167 (9th Cir. 1990) – is used in
 3   the Ninth Circuit and elsewhere to resolve discretionary
 4   abstention questions arising under § 1334(c)(1).   Neither party
 5   on appeal disputes the correctness of applying the Tucson Estates
 6   test in determining whether a bankruptcy court should hear and
 7   decide a § 505 motion.   Furthermore, virtually all of the factors
 8   in the first test are subsumed within the Tucson Estates test.
 9   Therefore, we will assume without deciding that application of
10   the Tucson Estates test is the correct means for determining
11   whether a bankruptcy court should abstain from hearing and
12   deciding a motion under § 505.
13        The Tucson Estates test sets forth the following factors for
14   consideration:
15        (1) the effect or lack thereof on the efficient
          administration of the estate if a Court recommends
16        abstention, (2) the extent to which state law issues
          predominate over bankruptcy issues, (3) the difficulty
17        or unsettled nature of the applicable law, (4) the
18
          6
19         (...continued)
          (1) the complexity of the tax issues to be decided;
20
          (2) the need to administer the bankruptcy case in an
21        orderly and efficient manner;
22
          (3) the burden on the bankruptcy court’s docket;
23
          (4) the length of time required for trial and decision;
24
          (5) the asset and liability structure of the debtor;
25        and
26
          (6) the prejudice to the taxing authority.
27
     Mem Dec. (May 31, 206) at 15:16-16:4 (citing IRS v. Luongo
28   (In re Luongo), 259 F.3d 323, 330 (5th Cir. 2001)).

                                      14
 1        presence of a related proceeding commenced in state
          court or other nonbankruptcy court, (5) the
 2        jurisdictional basis, if any, other than 28 U.S.C.
          § 1334, (6) the degree of relatedness or remoteness of
 3        the proceeding to the main bankruptcy case, (7) the
          substance rather than form of an asserted “core”
 4        proceeding, (8) the feasibility of severing state law
          claims from core bankruptcy matters to allow judgments
 5        to be entered in state court with enforcement left to
          the bankruptcy court, (9) the burden of [the bankruptcy
 6        court’s] docket, (10) the likelihood that the
          commencement of the proceeding in bankruptcy court
 7        involves forum shopping by one of the parties, (11) the
          existence of a right to a jury trial, and (12) the
 8        presence in the proceeding of nondebtor parties.
 9   In re Tucson Estates, 912 F.2d at 1167 (citing In re Republic
10   Reader’s Serv., Inc., 81 B.R. 422, 429 (Bankr. S.D. Tex. 1987)).
11        1.      Tucson Estates Factors 1 & 6 – Effect of Abstention on
12                Case Administration and Relationship Between Main
13                Bankruptcy Case and Proceeding in Question
14        The bankruptcy court opined that abstention would not
15   negatively impact administration of CM Reed Almeda’s bankruptcy
16   case.     At the time of the bankruptcy court’s decision,
17   administration of CM Reed Almeda’s single-asset bankruptcy estate
18   hinged on a sale of the land, and no sale had yet been
19   consummated.     More importantly, the court noted that the debtor
20   “has always contemplated” a liquidating plan to resolve its
21   chapter 11 case and that “the debtor has no general unsecured
22   creditors” who would be inconvenienced by any delay in
23   distribution of any future sale proceeds pending resolution of
24   the parties’ surviving tax disputes.     The court also found
25   telling the fact that CM Reed Almeda had made no effort to seek
26   any determination of any of its tax liability until roughly two
27   years after the bankruptcy case was commenced and Harris County
28   filed its proof of claim covering tax years 2007 through 2013.

                                       15
 1        On appeal, CM Reed Almeda essentially contends that the
 2   estate’s inability to pay any creditors until the tax dispute
 3   with Harris County is resolved is sufficient impact on
 4   administration of the estate, and a sufficient relationship to
 5   the main case, to militate against abstention.    But CM Reed
 6   Almeda: (1) did not challenge any of the facts the bankruptcy
 7   court relied upon in assessing the relationship and impact
 8   factors; (2) did not challenge any of the inferences the
 9   bankruptcy court drew from those facts; and (3) did not challenge
10   the court’s application of those facts in weighing the first and
11   sixth Tucson Estates factors.   Simply put, CM Reed Almeda has not
12   demonstrated that the bankruptcy court’s application of the
13   correct legal standard “was illogical, implausible, or without
14   support in inferences that may be drawn from the facts in the
15   record.”   Hinkson, 585 F.3d at 1262–63.   Nor is any such
16   misapplication evident to us.
17        2.    Tucson Estates Factors 2 & 3 – The Predominance of
18              State Law Issues and their Complexity or Difficulty
19        As the bankruptcy court put it, “the [§] 505 motion involves
20   only state law issues,” and “[r]esolution of those issues is more
21   complex than asserted by the debtor.”   The bankruptcy court
22   explained that contesting the assessed value of the land and
23   determining the extent to which anticipated remediation costs
24   could be taken into account would be governed by state law and
25   that the parties appeared to disagree regarding these issues
26   given the positions they asserted in their moving and opposition
27   papers.
28        On appeal, CM Reed Almeda posits that the legal issues the

                                     16
 1   bankruptcy court expressed concern over were not really in
 2   dispute.   Instead, it contended that the parties’ dispute focused
 3   exclusively on a factual issue: the prospective costs of
 4   remediation.   CM Reed Almeda has not explained why the bankruptcy
 5   court’s perception of the anticipated litigation was incorrect or
 6   even why its own perception might be more correct than the
 7   bankruptcy court’s on this issue.    Put another way, CM Reed
 8   Almeda has not demonstrated that the bankruptcy court’s
 9   assessment of Tucson Estates Factors 2 & 3 was illogical,
10   implausible, or without support in the record.
11        3.    Tucson Estates Factor 4 – Pending Related Proceeding
12              Before a State Court or Tribunal
13        The bankruptcy court conceded that there was no state
14   proceeding pending to address CM Reed Almeda’s disputed tax
15   liability, but the court gave this factor little weight.    For the
16   tax years 2015 and 2016, the bankruptcy court pointed out that CM
17   Reed Almeda could avail itself in Texas of the procedures and
18   grounds for contesting Harris County’s tax assessments permitted
19   under Texas law and that there was no legitimate need to
20   substitute a Nevada bankruptcy court for the Texas tribunals
21   available to address the disputed tax liability.
22        Citing Security Farms v. Int’l Bhd. of Teamsters, 124 F.3d
23   999, 1009 (9th Cir. 1997), CM Reed Almeda argues on appeal that
24   the absence of a pending state proceeding is fatal to the
25   bankruptcy court’s discretionary abstention ruling.    But CM Reed
26   Almeda’s reliance on Security Farms is misplaced.    The absence of
27   a pending state proceeding is not dispositive here.    If we were
28   to hold to the contrary – that the absence of a pending state

                                     17
 1   proceeding is dispositive – our holding would be in conflict with
 2   In re Tucson Estates, 912 F.2d at 1167, and Eastport Assocs. v.
 3   City of Los Angeles (In re Eastport Assocs.), 935 F.2d 1071,
 4   1075-76 (9th Cir. 1991).    Both Tucson Estates and Eastport
 5   Assocs. identified “the presence of a related proceeding
 6   commenced in state court or other nonbankruptcy court” as one of
 7   a dozen factors to weigh in deciding whether to apply
 8   discretionary abstention.    If the presence of a state court
 9   proceeding was a mandatory requirement, both Tucson Estates and
10   Eastport Assocs. would have specified that the presence of a
11   state proceeding was an absolute prerequisite, rather than merely
12   identifying it as one of twelve factors the bankruptcy court
13   needed to consider and weigh.
14        Our analysis is supported by Schulman v. California
15   (In re Lazar), 237 F.3d 967, 981-82 (9th Cir. 2001).    Lazar, like
16   Security Farms, involved an action removed from state court to
17   the bankruptcy court.   Lazar followed Security Farms and
18   generally held that, as a consequence of the removal, no state
19   court action thereafter existed, so both 28 U.S.C. § 1334(c)(1)
20   permissive abstention and 28 U.S.C. § 1334(c)(2) mandatory
21   abstention were unavailable.    Lazar, 237 F.3d at 981-82.
22        In a footnote, Lazar acknowledged Eastport Assocs. and
23   pointed out that Eastport Assocs. applied the Tucson Estates
24   twelve-factor test for determining the propriety of permissive
25   abstention even though no state proceeding had been commenced.
26   Lazar, 237 F.3d at 982 n.17.    Instead of treating Security Farms
27   and Eastport Assocs. as being in conflict, Lazar harmonized the
28   two by effectively limiting its holding (and Security Farms’

                                      18
 1   holding) to actions removed to the bankruptcy court under
 2   28 U.S.C. § 1452(a).   Lazar, 237 F.3d at 982 n.17.
 3        Here, Security Farms does not apply because the action in
 4   the bankruptcy court was not a removed state court action.    Thus,
 5   we reject CM Reed Almeda’s argument that the bankruptcy court’s
 6   grant of discretionary abstention was fatally defective in the
 7   absence of a pending state action on the parties’ tax dispute.7
 8        4.   Tucson Estates Factor 5 – Alternate Bases For Federal
 9             Jurisdiction
10        The bankruptcy court stated that § 505 was jurisdictional in
11   nature and provided an alternate ground for federal jurisdiction
12   in addition to 28 U.S.C. § 1334(b).   See generally Mantz v. Cal.
13   State Bd. of Equalization (In re Mantz), 343 F.3d 1207, 1211 (9th
14   Cir. 2003) (describing § 505 as a jurisdictional grant of
15   authority).   Nonetheless, the bankruptcy court concluded that, to
16   the extent the existence of an alternate ground for federal
17   jurisdiction ordinarily might weigh against abstention, this
18   weight was offset by the plain language of § 505, which makes the
19   exercise of jurisdiction under § 505 permissive rather than
20   mandatory.
21
22        7
           This Panel previously held in In re Bankruptcy Petition
23   Preparers Who Are Not Certified Pursuant to Requirements of
     Arizona Supreme Court, 307 B.R. at 140, that Security Farms’
24   holding only applied to mandatory abstention requests. It is
     difficult to reconcile Bankruptcy Petition Preparers with Lazar,
25   which held that both permissive and mandatory abstention
26   doctrines are unavailable in actions removed from state court.
     Because we hold that Lazar supports the bankruptcy court’s
27   application of discretionary abstention, we need not further
     address here the apparent tension between Lazar and Bankruptcy
28   Petition Preparers.

                                     19
 1        On appeal, CM Reed Almeda completely ignores the bankruptcy
 2   court’s Tucson Estates Factor 5 analysis and merely states “No
 3   other basis for jurisdiction exists.”   This statement is wholly
 4   unsupported and does not meaningfully challenge the bankruptcy
 5   court’s analysis.   Thus, CM Reed Almeda has not demonstrated that
 6   the bankruptcy court’s assessment of Tucson Estates Factor 5 was
 7   illogical, implausible, or without support in the record.
 8        5.   Tucson Estates Factors 7 & 8 – Substance Rather than
 9             Form of “Core” Proceeding and Feasibility of Severing
10             State Law Claims From Core Bankruptcy Matters
11        The bankruptcy court did not say much about these two
12   factors, except to state that “[t]here are no ‘core’ bankruptcy
13   matters to be severed.”   We do not agree with this statement.
14   When, as here, tax liability has been asserted in proofs of claim
15   filed in the bankruptcy case, a § 505 motion seeking a
16   determination of the debtor’s tax liability falls within the
17   ambit of 28 U.S.C. § 157(b)(2)(B), which identifies as “core” the
18   allowance or disallowance of claims against the estate.
19   Moreover, the motion “arises under Title 11” because § 505 in
20   essence creates a “cause of action” for the determination of tax
21   liability.   28 U.S.C. § 157(a); see also Wilshire Courtyard v.
22   Cal. Franchise Tax Bd. (In re Wilshire Courtyard), 729 F.3d 1279,
23   1285 (9th Cir. 2013) (“Proceedings ‘arising under’ title 11
24   involve causes of action created or determined by a statutory
25   provision of that title.”).
26        Nonetheless, even if this tax dispute qualifies as a core
27   proceeding, this does not necessarily mean that these two Tucson
28   Estates factors militate against abstention.   To the contrary,

                                     20
 1   the seventh Tucson Estates factor requires us to focus on the
 2   substance of the “core” proceeding.    Here, that substance is a
 3   dispute over taxes arising under state law, which dispute could
 4   and would arise regardless of the intervening bankruptcy case.
 5   And the eighth Tucson Estates factor requires us to focus on the
 6   existence of state law claims and the feasibility of severing
 7   them “from core bankruptcy matters to allow judgments to be
 8   entered in state court with enforcement left to the bankruptcy
 9   court.”
10        According to CM Reed Almeda, the absence of a pending state
11   court action renders it infeasible to sever out the state law tax
12   claims.   We disagree.   As the bankruptcy court pointed out, Texas
13   has an entire system of tribunals and a comprehensive statutory
14   scheme for resolving disputes concerning ad valorem property
15   taxes assessed under Texas law.    CM Reed Almeda has not offered
16   any reason why the Texas tribunals are incapable of effectively
17   and efficiently determining CM Reed Almeda’s tax liability for
18   2015 and 2016.   In fact, the only apparent impediment to
19   determining this liability in those tribunals is CM Reed Almeda’s
20   failure and refusal to bring its tax dispute before those
21   tribunals.
22        In short, even though CM Reed Almeda’s § 505 motion
23   qualified as a core proceeding, the seventh and eighth Tucson
24   Estates factors still militated in favor of abstention.
25        6.    Tucson Estates Factor 9 – Burden on the Bankruptcy
26              Court’s Docket
27        The bankruptcy court did not distinctly articulate the
28   extent of the burden on its docket that would result from its

                                       21
 1   hearing and deciding the § 505 motion.   Even so, the bankruptcy
 2   court made a number of observations relevant to this factor.   The
 3   court observed that “an evidentiary hearing would be required if
 4   this court were to hear the 505 Motion,” and that “[g]iven this
 5   court’s other commitments, there is no reason to believe that it
 6   could hear and determine the issues the debtor has raised more
 7   efficiently than the state forum.”   The court further observed
 8   that CM Reed Almeda had offered no explanation why the court
 9   should need to “start from scratch” in analyzing Texas law
10   governing the assessment of property taxes and disputes regarding
11   those assessments, “when there is a more efficient tribunal that
12   can determine the valuation issues under applicable state law.”
13   In effect, the bankruptcy court’s observations amount to a
14   finding that hearing the § 505 motion would constitute an
15   unnecessary burden on its docket.
16        Instead of addressing this burden, CM Reed Almeda on appeal
17   has merely pointed out that bankruptcy courts frequently address
18   valuation disputes and has contended that its tax dispute with
19   Harris County is nothing more than that.   CM Reed Almeda’s
20   appellate argument completely ignored the bankruptcy court’s
21   concerns that the tax dispute is more complex than CM Reed Almeda
22   has acknowledged and that the state tax tribunals are better
23   situated to resolve the dispute more efficiently.   Once again,
24   CM Reed Almeda has not demonstrated that the court’s assessment
25   of the factor in question was illogical, implausible, or without
26   support in the record.
27        7.   Tucson Estates Factor 10 – Forum Shopping Concerns
28        The bankruptcy court stated that it had developed a “strong

                                    22
 1   sense” of forum shopping as a result of CM Reed Almeda’s conduct,
 2   particularly its delay in contesting the disputed tax
 3   assessments.   In essence, the court reasoned that CM Reed
 4   Almeda’s lack of notice argument did not credibly explain the
 5   extent of the delay; rather, the court inferred from CM Reed
 6   Almeda’s conduct an intent to delay having to pay the tax
 7   liability for as long as possible, which also could explain why
 8   CM Reed Almeda was insistent that the bankruptcy court should
 9   hear and decide the tax dispute.
10        On appeal, CM Reed Almeda focuses on a different set of
11   facts and attempts to draw from those facts an inference that
12   Harris County is forum shopping.     CM Reed Almeda ignores the
13   facts relied upon by the court and the inference of forum
14   shopping the court drew from those facts.     Yet again, CM Reed
15   Almeda has not demonstrated that the court’s assessment of this
16   factor was illogical, implausible, or without support in the
17   record.
18        8.   Tucson Estates Factors 11 & 12 – Jury Trial Rights and
19             Presence of Non-Debtor Parties
20        The bankruptcy court effectively found that these two
21   factors were neutral – that CM Reed Almeda had no jury trial
22   right and that, regardless of whether additional government
23   entities needed to be added to the proceeding as necessary
24   parties, the other Tucson Estates factors justified the court’s
25   abstention.
26        At bottom, CM Reed Almeda has done virtually nothing on
27   appeal to persuade us that the bankruptcy court’s application of
28   the Tucson Estates factors “was illogical, implausible, or

                                     23
 1   without support in inferences that may be drawn from the facts in
 2   the record.”   Hinkson, 585 F.3d at 1262–63.   Nor is any such
 3   misapplication evident to us.   Accordingly, the bankruptcy court
 4   did not abuse its discretion when it decided to abstain from
 5   hearing and deciding the tax dispute with respect to the 2015 and
 6   2016 tax years.
 7        9.   CM Reed Almeda’s Other Abstention-Related Arguments
 8        There are only two other issues we need to address.    First,
 9   CM Reed Almeda maintains that Harris County forfeited the
10   abstention issue by filing proofs of claim.    CM Reed Almeda has
11   not supported this novel argument with any legal authority, nor
12   are we aware of any that would support it.     In fact, the notion
13   that the filing of proofs of claim could strip the bankruptcy
14   court of its discretion to abstain from hearing a dispute
15   relating to those claims is wholly inconsistent with Tucson
16   Estates and its progeny.
17        Second, CM Reed Almeda argues that, if abstention were
18   appropriate with respect to the 2015 and 2016 tax years, it also
19   should have been appropriate for the 2007 through 2014 tax years.
20   This argument is nonsensical and ignores the fact that the
21   bankruptcy court was able to resolve the tax liability dispute
22   regarding the 2007 through 2014 tax years by considering the
23   discrete and relatively straightforward timeliness issue.    In
24   contrast, the tax liability dispute regarding the 2015 and 2016
25   tax years could not so easily be resolved, and this distinction
26   in the complexity of the dispute was sufficient, in the
27   bankruptcy court’s eyes, to justify a different result on the
28   abstention issue.   We cannot say that the bankruptcy court’s

                                     24
 1   justification for treating the 2007 through 2014 tax years
 2   differently from the 2015 and 2016 tax years was illogical,
 3   implausible or without support in the record.
 4                              CONCLUSION
 5        For the reasons set forth above, the bankruptcy court’s
 6   order denying CM Reed Almeda’s § 505 motion is AFFIRMED.
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

                                    25