PNL Asset Mgmt Co. v. Kerrville ISD

• Decision Date: 13 December 2000
• Docket Number: No. 04-00-00138-CV,04-00-00138-CV
• Citation: 37 S.W.3d 80
• Parties: (Tex.App.-San Antonio 2000) PNL ASSET MANAGEMENT COMPANY, L.L.C., Appellant v. KERRVILLE INDEPENDENT SCHOOL DISTRICT, Appellee
• Court: Texas Court of Appeals

Page 80

37 S.W.3d 80 (Tex.App.-San Antonio 2000)

PNL ASSET MANAGEMENT COMPANY, L.L.C., Appellant v. KERRVILLE INDEPENDENT SCHOOL DISTRICT, Appellee

No. 04-00-00138-CV

Court of Appeals, Fourth District of Texas

December 13, 2000

Rehearing Overruled Jan. 9, 2001.

From the 198th Judicial District Court, Kerr County, Texas Trial Court No. 90-435-B Honorable Charles Sherrill, Judge Presiding

Sitting: Phil Hardberger, Chief Justice Paul W. Green, Justice Karen Angelini, Justice.

Opinion by Phil Hardberger, Chief Justice.

PNL Asset Management Company, L.L.C. ("PNL") appeals a summary judgment granted in favor of Kerrville Independent School District ("KISD") in a case involving delinquent property taxes. In its brief, PNL raises six issues, contending: (1) PNL is not liable for the taxes; (2) no lien could attach against the property for nonpayment of the taxes; (3) PNL is not liable for penalties for failure to pay the taxes; (4) PNL did not make a voluntary tax payment; (5) PNL is not liable for taxes assessed with respect to properties PNL did not own; and (6) PNL is not required to pay taxes that KISD is barred from collecting due to limitations. We affirm the trial court's judgment.

Background

In 1987, C.D. Peterson purchased a tract of land in Kerrville known as the Schreiner Property. Peterson executed a Deed of Trust in favor of Charles Schreiner Bank in connection with this purchase. In 1989, Peterson purchased an additional tract of land in Kerrville known as the Brown Property, and he executed another Deed of Trust in favor of Charles Schreiner Bank in connection with this purchase. In April of 1990, the Federal Deposit Insurance Corporation ("FDIC") was appointed receiver of the assets of Charles Schreiner Bank. The FDIC sold its lien interest in the Schreiner Property and Brown Property to PNL in August of 1996. In November of 1996, PNL became the owner of both the Schreiner Property and the Brown Property through a foreclosure sale.

At the time of the foreclosure, the taxes KISD had assessed against the Schreiner Property had not been paid since 1987, and the taxes KISD had assessed against the Brown Property had not been paid since 1989. In addition, taxes on the personal property located on the Schreiner Property ("Personal Property No. 1") had not been paid since 1987.

In December of 1997, KISD added PNL as a party to a pending tax collection suit. The suit sought to collect taxes due on the Schreiner Property, the Brown Property, and Personal Property No. 1. In addition, the suit sought to collect taxes that had been assessed against an unrelated tract of land in Kerrville known as the Westland Property and certain personal property referred to as Personal Property No. 2.

In February of 1998, Fidelity Abstract & Title Co. ("Fidelity Title") delivered two checks to KISD in payment of the taxes, interest and penalties on the Brown Property. The parties dispute whether a transmittal letter accompanied the check, stating the taxes were being paid under protest. In May of 1998, Fidelity Title delivered a check to KISD in payment of the taxes, interest and penalties on the Schreiner Property and Personal Property No. 1. The parties do not dispute that this payment was accompanied by a transmittal letter stating that the taxes were being paid under protest.

The affidavit of PNL's manager, John Gilbert, states that PNL never owned any interest in the Westland Property or the Personal Property No. 2, and KISD does not dispute this fact.

In June of 1998, PNL filed a counterclaim in KISD's tax suit, seeking a refund of the taxes, interest and penalties paid on the Schreiner Property and Brown Property for tax years 1991 through 1996. PNL also sought a refund of the taxes, interest and penalties paid on Personal Property No. 1 for tax years 1991 and 1992.

The parties filed competing motions for summary judgment, and the trial court granted summary judgment in favor of KISD. PNL timely filed this appeal.

Standard of Review

In reviewing a summary judgment on appeal, we must determine whether the movant met its burden of showing that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985); Lee M. Bass, Inc. v. Shell Western E & P, Inc., 957 S.W.2d 159, 160 (Tex. App. San Antonio 1997, no pet.). In determining whether a material fact issue exists to preclude summary judgment, evidence favoring the non-movant is taken as true, and all reasonable inferences are indulged in the non-movant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d at 548-49. When both parties file motions for summary judgment and one such motion is granted, we must review all of the issues presented and, if reversible error is found, render such judgment as the trial court should have rendered, including rendering judgment for the other movant. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988); Lee M. Bass, Inc. v. Shell Western E & P, Inc., 957 S.W.2d at 160.

PNL's Liability for Taxes

PNL's first two issues relate to the trial court's determination that it was liable for taxes assessed against the Brown Property and Schreiner Property for tax years 1991 through 1996, which are the tax years in which the FDIC held a lien interest in the properties. PNL contends that the FDIC is personally liable for those taxes, and federal law prevented a lien from attaching to the properties to enforce payment of those taxes. KISD responds that the lien properly attached.

Whether such a lien was permissible depends on this court's interpretation of 12 U.S.C. § 1825(b)(2).

Section 1825(b)(2) provides:

No property of the corporation shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the [FDIC], nor shall any involuntary lien attach to the property of the [FDIC].

12 U.S.C. § 1825(b)(2). Two competing views exist as to whether this statutory provision prohibits the attachment of a lien to property in which the FDIC holds only a lien interest.

Several courts have concluded that the clear and unambiguous language of section 1825(b)(2) precludes a lien from attaching. See Old Bridge Owners Co-op. Corp. v. Township of Old Bridge, 914 F. Supp. 1059, 1065 (D. N.J. 1996); PLM Tax Certificate Program 1991-1992, LP v. Denton Investments, Inc., 195 Ariz. 210, 213, 986 P.2d 243, 246 (Ariz. Ct. App. 1999). These courts contend that the FDIC remains personally liable for those taxes under section 1825(b)(1); however, section 1825(b)(2) expressly prohibits a lien from attaching to secure that payment. Such attachment is precluded so that the value of the security interest remains unchanged after the FDIC is appointed receiver, maintaining the marketability of the security interest by protecting any potential purchaser from any liability for delinquent taxes assessed during the period of receivership. PLM Tax Certificate Program 1991-1992, LP v. Denton Investments, Inc., 195 Ariz. at 213, 986 P.2d at 246.

Other courts take a contrary view based on their belief that section 1825(b)(2) only precludes a lien if the FDIC has fee ownership rather than a mere lien interest. See In re Stafford Pool & Fitness Center, 252 B.R. 627, 631 (Bankr. D. N.J. 2000); 37 Huntington St. v. City of Hartford, 26 Conn. L. Rprt. 525, 2000 WL 226372, at *3-4 (Conn. Super. Ct. 2000); Casino Reinvestment Development Authority v. Cohen, 321 N.J. Super. 297, 728 A.2d 868, 307 (N.J. Super. Ct. Law Div. 1998). The lead case for this view, Casino Reinvestment Development Authority, recognized the contrary holding in Old Bridge Owners Coop. Corp., but held that neither section 1825(b)(1) nor New Jersey tax law makes the FDIC personally liable for the payment of the tax. Casino Reinvestment Development Authority v. Cohen, 728 A.2d at 306. The New Jersey court then asserted that the RTC's property was a mortgage lien, not the underlying real estate; therefore, the lien which attaches to the real property under New Jersey law did not attach to the property of the RTC. See id. at 307. Both In re Stafford Pool & Fitness Center and 37 Huntington St. v. City of Hartford follow this reasoning. In In re Stafford Pool & Fitness Center, the bankruptcy court further emphasized the inability to collect the property tax from the FDIC under New Jersey law. 252 B.R. at 631. The bankruptcy court noted that New Jersey treats unpaid taxes as a lien on real property and not as a personal liability of the owner. See id. The court then concluded that if the tax liens did not attach to the real property, there would be no way for the tax liability to be enforced. See id.

This court has held that the FDIC's lien is "property" under section 1825. See State v. Bankerd, 838 S.W.2d 639, 641 (Tex. App. San Antonio 1992, writ denied). In that case, various taxing authorities appealed a trial court judgment ordering that the foreclosure of a parcel of land for the non-payment of taxes was subject to a lien held by the FDIC. See id. at 640. This court stated that the FDIC's lien was "property" owned by the FDIC under section 1825, noting that although Texas law does not recognize a mortgage lien interest as property, state law must yield when there is a conflict with valid federal law. See id. at 641. However, the holding in Bankerd does not affect the reasoning supporting the view that a lien should attach. Even accepting that the FDIC's lien interest is property for purposes of section1825(b)(2), the courts contending the lien attaches argue that the tax lien "attaches" only to the real property, not to the lien interest, and section 1825(b)(2) only prohibits the "attachment" of the lien to the FDIC's property.

There are policy reasons to support both views. With regard to the view that no lien attaches, section 1825(b)(2) was enacted as part of the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA") in response to the...