189 F.3d 442 (4th Cir. 1999), 98-2211, In re In Re: NVR Homes v. Clerks of the Cir. Ct. for Anne Arundel
|Docket Nº:||98-2211 No. 98-2244 No. 98-2271 No. 98-2272 No. 98-2273 (CA-97-1238-A, BK-92-11704-DOT)|
|Citation:||189 F.3d 442|
|Party Name:||In Re: NVR, LP, Debtor. NVR HOMES, INCORPORATED, Plaintiff-Appellee, v. CLERKS OF THE CIRCUIT COURTS FOR ANNE ARUNDEL COUNTY, MARYLAND; CLERKS OF THE CIRCUIT COURTS FOR BALTIMORE, MARYLAND; CLERKS OF THE CIRCUIT COURTS FOR CARROLL COUNTY, MARYLAND; CLERKS OF THE CIRCUIT COURTS FOR FREDERICK COUNTY, MARYLAND; CLERKS OF THE CIRCUIT COURTS FOR HARFORD|
|Case Date:||July 12, 1999|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
Argued: April 7, 1999
Corrected opinion filed: August 16, 1999
Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. T. S. Ellis, III, District Judge.
[Copyrighted Material Omitted]
COUNSEL ARGUED: Julia Melville Andrew, Assistant Attorney General, Baltimore, Maryland, for Appellants. Arnold Murray Weiner, SNYDER, WEINER, WELTCHEK, VOGELSTEIN & BROWN, Pikesville, Maryland, for Appellee. ON BRIEF: J. Joseph Curran, Jr., Attorney General of Maryland, Baltimore, Maryland; Robert D. Edmundson, Senior Deputy Attorney General, Pittsburgh, Pennsylvania, for Appellants. James M. Sack, SACK & ASSOCIATES, McLean, Virginia; Allan P. Hillman, Nathan D. Adler, NEUBERGER, QUINN, GIELEN, RUBIN & GIBBER, P.A., Baltimore, Maryland, for Appellee.
Before WILKINSON, Chief Judge, and HAMILTON and WILLIAMS, Circuit Judges.
Vacated in part, affirmed in part, and reversed in part by published opinion. Judge Williams wrote the opinion, in which Judge Hamilton joined. Chief Judge Wilkinson wrote an opinion concurring in part and concurring in the judgment.
WILLIAMS, Circuit Judge:
On October 23, 1995, NVR Homes, Inc. (NVR), a former debtor in bankruptcy, filed a motion in accordance with Federal Rule of Bankruptcy Procedure 9014, seeking a declaration that 11 U.S.C.A. § 1146(c) (West 1993) exempted it from certain transfer and recordation taxes that it had paid in connection with the transfer of real property during the bankruptcy period. The state and local taxing authorities who had received and refused or failed to refund the recordation and transfer tax proceeds were located in Pennsylvania and Maryland. Pursuant to Rule 9014, each of the taxing authorities was served with notice of the motion and each responded by filing motions for abstention, dismissal, or summary judgment. On March 25, 1996, the bankruptcy court granted NVR's motion and held that under § 1146(c), NVR was exempt from transfer and re-cordation taxes on any real property transfers completed between April 6, 1992, the date that NVR filed a bankruptcy petition, and September 30, 1993, the date that itsreorganization plan was fully implemented and the bankruptcy period ended.
Thereafter, the state taxing authorities1 filed motions requesting the bankruptcy court reconsider its order in light of the Supreme Court's interpretation of Eleventh Amendment immunity in Seminole Tribe v. Florida, 116 S.Ct. 1114 (1996). On March 28, 1997, the bankruptcy court issued an order amending its judgment dated March 25, 1996, specifically holding that "§ 106 of the Bankruptcy Code is unconstitutional and that the Eleventh Amendment precludes[the bankruptcy court's previous order] from binding the Commonwealth of Pennsylvania and the Maryland circuit court clerks [the state taxing authorities] as collectors of a state transfer tax." (J.A. at 335.)
On appeal, the district court affirmed the bankruptcy court's judgment that NVR was exempt from transfer and recordation taxes under § 1146(c). The district court reversed the bankruptcy court's decision that the Eleventh Amendment immunized the state taxing authorities, reasoning that the Rule 9014 motion was not a "suit" for Eleventh Amendment purposes. The district court refused, however, to determine whether the declaratory judgment would be binding upon the state taxing authorities. For the following reasons, we vacate in part, affirm in part, and reverse in part.
The facts of this appeal are largely undisputed and have been thoroughly recited by the lower courts. See Clerk of the Circuit Court v. NVR Homes, Inc., 222 B.R. 514 (E.D. Va. 1998); In re NVR L.P., 206 B.R. 831 (Bankr. E.D. Va. 1997). We will only briefly address them here.
During the 1980s, NVR was a leading homebuilder whose primary operations were located in the states of Virginia and Maryland. In a move to expand its operations in 1987, NVR acquired Ryan Homes, a major homebuilder, and financed the acquisition with over $450,000,000 in debt. The financing was provided by a consortium of banks and the issuance of subordinated debt securities. A short time later, NVR began experiencing declining operating margins and had difficulty in meeting its substantial debt service commitments. Its financial difficulties did not abate, and on April 6, 1992, NVR sought protection under Chapter 11 of the Bankruptcy Code.
The bankruptcy court allowed NVR to continue its business operations essentially uninterrupted while it pursued the development and confirmation of a reorganization
plan. From April 6, 1992, the petition date, until September 30, 1993, the date NVR eventually emerged from bankruptcy, NVR made 5,571 transfers of real property and paid $8,349,103 in transfer and recordation taxes to state and local taxing authorities. NVR paid just under $7,000,000 of this amount to taxing authorities in Pennsylvania and Maryland.
On July 22, 1993, the bankruptcy court confirmed NVR's plan of reorganization (the Plan), which satisfied the outstanding bank consortium debt with funds...
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