United States District Court, D. Nevada
JAMES C. MAHAN, District Judge.
Presently before the court is the matter of Branch Banking & Trust Co. v. R&S St. Rose, LLC (case no. 2:13-CV-02165-JCM), under which Commonwealth Land Title Ins. Co. v. R&S St. Rose, LLC (case no. 2:13-CV-02177-GMN) was consolidated. (Doc. # 13). Appellants, Branch Banking & Trust Company ("BB&T") and Commonwealth Land Title Insurance Co. ("Commonwealth"), filed opening briefs (docs. # 7, 8), to which appellee R&S St. Rose, LLC answered (doc. # 10). Appellants Commonwealth (doc. # 14) and BB&T (doc. # 15) have filed replies.
The instant appeal arises from the bankruptcy court's order confirming the appellee's first amended liquidating plan of reorganization ("the plan") pursuant to chapter 11 of the bankruptcy code. (Doc. # 1 at 4). Appellants seek reversal of this confirmation order, asserting that the bankruptcy court erred in: (1) permitting appellee to place the Clark County Taxing Authority ("CCTA") into a separate class; (2) treating the CCTA as a separate impaired class; and (3) cramming down the plan over the objections of BB&T. (Doc. # 7 at 7). The court will address each in turn.
II. Legal Standard
Jurisdiction over an appeal from an order of a bankruptcy court is governed by 28 U.S.C. § 158. In re Rains, 428 F.3d 893, 900 (9th Cir. 2005). A district court has jurisdiction to hear appeals from "final judgments, orders, and decrees... and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges." 28 U.S.C. § 158(a); In re Rains, 428 F.3d at 900. The district court reviews a bankruptcy court's conclusions of law, including its interpretation of the bankruptcy code, on a de novo basis. In re Rains, 428 F.3d at 900; In re Maunakea, 448 B.R. 252, 258 (D. Haw. 2011). Findings of fact are reviewed for clear error. United States v. Hinkson, 585 F.3d 1247, 1260 (9th Cir. 2009).
A. Classification of claims
Appellants argue that the bankruptcy court erred by permitting appellee to place the CCTA in a class. In particular, appellants contend that 11 U.S.C. §§ 1123(a)(1), 507(a)(8), and 1129(a)(9) do not permit a plan proponent to place a property tax claim in a class and, as such, appellee is unable to satisfy § 1129(a)(10).
In response, appellee argues that the CCTA is a "secured tax claim" and, thus, does not fall within the "unsecured claims" as stated in § 507(a)(8). In support, appellee contends that § 1123(a)(1) clearly prohibits the classification of "unsecured tax claims, " but not the classification of "secured tax claims." Appellee further contends that appellants confuse the terms "classification" and "treatment." The court agrees.
Title 11 U.S.C. § 1123(a)(1) states that a plan shall "designate... classes of claims, other than claims of a kind specified in section... 507(a)(8) of this title, and classes of interests[.]" Section 507(a) governs claim priority and subsection (8) applies to "unsecured claims of governmental units[.]" Appellants concede that the CCTA's claim is a "secured tax claim." (Doc. # 7 at 14). Accordingly, the CCTA's claim is not a claim within the meaning of § 507(a)(8) so as to be precluded from classification under § 1123(a)(1).
Title 11 U.S.C. § 1129(a) governs the confirmation of a plan and states in relevant part:
(9) Except to the extent that the holder of a particular claim has agreed to a different treatment of such ...