China Peak Resort, In re
| Decision Date | 25 May 1988 |
| Docket Number | No. 87-2542,87-2542 |
| Citation | 847 F.2d 570 |
| Parties | 18 Collier Bankr.Cas.2d 1113, 18 Bankr.Ct.Dec. 1430 In re CHINA PEAK RESORT, Debtor. CALIFORNIA STATE BOARD OF EQUALIZATION, Appellant, v. SIERRA SUMMIT, INC., Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert F. Tyler, Deputy Atty. Gen., Sacramento, Cal., for appellant.
David Ray Jenkins, Fullerton, Lang, Richert & Patch, P.C., Fresno, Cal., for appellee.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel.
Before SNEED, HALL and NOONAN, Circuit Judges.
This case presents a challenge by the California State Board of Equalization ("the Board") to the accepted rules of this circuit that California sales tax does not apply to the sale of assets of an estate in bankruptcy, California State Board of Equalization v. Goggin, 191 F.2d 726 (9th Cir.1951), ("Goggin I"), cert. denied, 342 U.S. 909, 72 S.Ct. 302, 96 L.Ed. 680 (1952), and that California may not impose a use tax on the purchaser of such assets when the use tax operates only when the sales tax has not been paid. California State Board of Equalization v. Goggin, 245 F.2d 44 (9th Cir.) ("Goggin II"), cert. denied, 353 U.S. 961, 77 S.Ct. 863, 1 L.Ed.2d 910 (1957).
In 1981 the federal receiver of China Peak Resort contracted for the sale of its assets for $3,530,000 to Snow Summit Ski Corp. ("Snow Summit") and Snow Summit's wholly owned subsidiary, Sierra Summit Ski Corp. ("Sierra Summit"). The assets included all fixed improvements and all personal property; skis were among the stock in trade conveyed. A bill of sale issued from the receiver to Sierra Summit for the property.
The Board assessed a sales tax of $55,000 on the sale by the receiver. The bankruptcy court on July 27, 1983 enjoined collection of the assessment. The Board was also prohibited from assessing or determining "a sales or other tax" against the receiver "or other parties." Nothing daunted, the Board in 1985 audited Sierra Summit and determined that use tax was owed by Sierra Summit on income of $196,518 from rentals of the skis acquired from the receiver. Sierra Summit sought enforcement of the bankruptcy court's injunction in order to prevent the Board from assessing the tax, but the bankruptcy court rejected this request, holding that it had no jurisdiction; that if it had jurisdiction it should abstain from exercising it; and that in any event its July 27, 1983 order did not bar the use tax. The Bankruptcy Appellate Panel reversed, 76 B.R. 757. From its judgment the Board appeals.
Jurisdiction and Abstention From Its Exercise. The bankruptcy court has jurisdiction to issue orders necessary to carry out its functions, 11 U.S.C. Sec. 105. The enjoining of state sales tax upon a liquidation is such an order. Goggin I. Having issued the order, the bankruptcy court had jurisdiction to enforce it. Any objection the Board might have made to the original order is too late. The order binds the Board, and the Board can only argue its interpretation.
By the same token, the bankruptcy court should not have abstained from exercising jurisdiction. That court had issued the order. It was incumbent on that court to interpret it. The Board relied on Debtor Reorganizers, Inc. v. State Board of Equalization 58 Cal.App.3d 691, 130 Cal.Rptr. 64 (1976), for the proposition that a use tax of the kind it was assessing did not violate Goggin II. But the bankruptcy court, faced with this challenge to Goggin II, was bound to apply federal law, not the gloss of the state courts.
The Board argues that the bankruptcy court's refusal to exercise jurisdiction is non-reviewable because of 28 U.S.C. Sec. 1334(c)(2). But the abstention was effected by the court under 28 U.S.C. Sec. 1334(c)(1) and so reviewable. See In re White Motor Credit, 761 F.2d 270, 273-74 (6th Cir.1985) (). We hold that it was not, as the statute requires, in the interest of justice, or in the interest of comity with state courts, or in the interest of respect for the state law, for the court to abstain from judging when it had already issued an injunction that no other court would be as well qualified to interpret.
Exemption From Taxation. Under California law rentals from tangible personal property are exempt from sales tax but subject to use tax. Cal. Rev. & Tax. Code Secs. 6390 and 6401. To be subject to use tax, however, the rentals must constitute sales as defined in Section 6006. This statute excepts from its definition of sales a lease of tangible personal property as to which the lessor has paid either sales or use tax measured by the purchase price of the property. Id. Sec. 6006...
To continue reading
Request your trial
-
In re Congoleum Corp.
...before by a different judge); see also In re China Peak Resort , 76 B.R. 757, 759 (B.A.P. 9th Cir. 1987), aff'd and remanded , 847 F.2d 570 (9th Cir. 1988), vacated sub nom. California State Bd. of Equalization v. Sierra Summit, Inc. , 490 U.S. 844, 109 S. Ct. 2228, 104 L. Ed. 2d 910 (1989)......
-
California State Board of Equalization v. Sierra Summit, Inc
...should be subject to the same tax liability as the owner had he been in possession of, and operating, the enterprise. Pp. 850-854. 847 F.2d 570 (CA9 1988), vacated and STEVENS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, O'CONNOR, SCALIA and KENNEDY, JJ., jo......
-
In re Texaco Inc.
...should not abstain from interpreting its own consummation order absent extraordinary circumstances"); see also In re China Peak Resort, 847 F.2d 570, 572 (9th Cir.1988), vacated on other grounds, 490 U.S. 844, 109 S.Ct. 2228, 104 L.Ed.2d 910 (1989). With respect to comity, the Second Circui......
-
In re One2One Commc'ns, LLC
...before by a different judge.); see also In re China Peak Resort , 76 B.R. 757, 759 (B.A.P. 9th Cir. 1987), aff'd and remanded , 847 F.2d 570 (9th Cir. 1988), vacated sub nom. California State Bd. of Equalization v. Sierra Summit , Inc. , 490 U.S. 844, 109 S. Ct. 2228, 104 L.Ed. 2d 910 (1989......