In re Wyly
| Decision Date | 10 May 2016 |
| Docket Number | CASE NO. 14–35043–BJH JOINTLY ADMINISTERED |
| Citation | 552 B.R. 338 |
| Parties | In re: Samuel Evans Wyly, et al., Debtors. |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
Josiah M. Daniel, III, Paul E. Heath, James Jay Lee, Rebecca Lynn Petereit, Vinson & Elkins L.L.P., Donald P. Lan, Jr., Lan Smith Sosolik, PLLC, Lesley C. Ardemagni, Law Offices of Judith W. Ross, Judith W. Ross, Eric A. Soderlund, Judith Ross, PC, Dallas, TX, David L. Kornblau, New York, NY, for Debtors.
Related to ECF Nos. 4, 75, 516, 923, & 938
Before the Court are the Motion Pursuant to Bankruptcy Code § 505 to Determine Tax Liability, If Any [ECF No. 4] and the Amended Motion Under Bankruptcy Code Section 505 to Determine Tax Liability, If Any [ECF No. 516] (together, the “Motions ”) filed by Samuel Evans Wyly (“Sam ”) and Carolyn Dee Wyly (“Dee, ” and together with Sam, the “Debtors ”), respectively, in which the Debtors seek to have this Court determine the allowed claim of the Internal Revenue Service (“IRS ”) against them. The Debtors have also objected to the proofs of claim1 filed by the IRS against them (together, the “Claim Objections ”).2 By agreement of the parties, the Motions and the Claim Objections were heard concurrently, as each seeks to have the Court determine the IRS' allowed claims against the Debtors' respective estates. Pursuant to a Scheduling Order agreed to by the parties and entered by the Court [ECF No. 564], trial commenced on January 6, 2016 and concluded on January 21, 2016. Closing arguments were heard on January 27 and 28, 2016. At the Court's direction, the Debtors and the IRS filed post-trial briefs on certain issues on February 5, 2016 and reply briefs to each other's post-trial brief on February 10, 2016. The Motions and Claim Objections are now ripe for ruling.
After carefully considering the arguments of the parties (as advanced orally and in writing both pre and post-trial), the evidence admitted at trial, and its own research of the legal issues raised, this Memorandum Opinion contains the Court's findings of fact and conclusions of law pursuant to Federal Rules of Bankruptcy Procedure 7052 and 9014.3
The district court of the Northern District of Texas has subject matter jurisdiction over the Debtors' bankruptcy cases (the “Cases ”) pursuant to 28 U.S.C. § 1334, and this Court has authority to determine the amount or legality of tax and the allowance or disallowance of claims against the bankruptcy estates pursuant to 28 U.S.C. § 157(a), (b)(1), (b)(2)(B), and (b)(2)(O ), 11 U.S.C. § 505(a),4 and the Order of Reference of Bankruptcy Cases and Proceedings Nunc Pro Tunc adopted in the Northern District of Texas on August 3, 1984. As explained by the Fifth Circuit, § 505(a)(1) is a “broad grant of jurisdiction” authorizing the bankruptcy court to determine certain tax issues, subject to statutory exceptions that are not applicable to the Cases.5 Venue is proper in this district pursuant to 28 U.S.C. § 1408.
At the Court's urging, the parties stipulated to a large number of undisputed facts, which are contained in the Joint Stipulations of Fact [ECF No. 1040] (the “Joint Stipulations ”) filed December 30, 2015. While the Court will not repeat those factual stipulations verbatim in this Memorandum Opinion, it adopts them as if they were set forth herein.
In addition, the parties were able to stipulate to the facts that will be necessary for them to compute the amount of tax, interest, and penalties that may...
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