California State Bd. of Equalization v. Sierra Summit, Inc.

PETITIONER: California State Bd. of Equalization
RESPONDENT: Sierra Summit, Inc.
LOCATION: Sable Communications of California

DOCKET NO.: 88-681
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 490 US 844 (1989)
ARGUED: Apr 19, 1989
DECIDED: Jun 12, 1989

David Ray Jenkins - on behalf of the Respondent
Robert F. Tyler, Jr. - on behalf of the Petitioner

Facts of the case


Media for California State Bd. of Equalization v. Sierra Summit, Inc.

Audio Transcription for Oral Argument - April 19, 1989 in California State Bd. of Equalization v. Sierra Summit, Inc.

William H. Rehnquist:

We'll have argument next in No. 88-681, Tyler v. David Ray Jenkins.

No, I'm sorry, California Board of Education v. Sierra Summit.

Mr. Tyler, you may proceed whenever you're ready.

Robert F. Tyler, Jr.:

Thank you, Mr. Chief Justice and may it please the Court:

At issue in this case is a proper interface between Federal bankruptcy power and the fundamental sovereign rights of the states to tax commerce and property within their borders.

The case concerns the Ninth Circuit's holding that a state may not tax a private party's subsequent commercial rentals of property purchased at a bankruptcy liquidation sale by reason of the purported preemptive effect of 28 U.S.C. Section 960 and the purported unconstitutional interference such taxation is seen as imposing upon the bankruptcy processes.

The state contends that this ruling is in error for three reasons.

First, whatever it is, Section 960 is obviously not a clear expression of preemptive intent stated to be necessary to preempt state taxation under this Court's ruling in Swarts v. Hammer.

Second, whatever the limits of intergovernmental immunity, the imposition of a nondiscriminatory tax on a liquidation sale or the purchaser therefrom certainly does not cross them.

Third, whatever the limits of bankruptcy jurisdiction, a bankruptcy court clearly has no jurisdiction to adjudicate a controversy between a state and a nonbankruptcy party concerning the taxability of transactions occurring long after the bankruptcy is closed.

William H. Rehnquist:

Mr. Tyler, there is kind of a procedural wrinkle in this case, isn't there, in that... it comes up because your client in effect was held in contempt for disobeying an injunction?

Robert F. Tyler, Jr.:

That's correct.

William H. Rehnquist:

Do you think the Ninth Circuit in this case, or the bankruptcy courts, did more than just interpret the terms of the injunction?

Robert F. Tyler, Jr.:

Yes, I do, for the simple reason that the injunction is circumscribed by the judgment underlying it and that judgment in turn is circumscribed by the pleadings brought by the parties underlying the adversary complaint.

That pleading, in turn, was brought by the debtor... if one will... or the trustee, state receiver's, under Bankruptcy Code Section 505.

In turn, Bankruptcy Code Section 505 only allows adjudication of the debtor and the estate's rights... tax rights and obligations... on property in the bankruptcy estate.

That's all that the trustee--

Antonin Scalia:

I don't understand that answer.

Your answer is that the judgment could not possibly go beyond the jurisdiction permitted?

Surely, it could.

Robert F. Tyler, Jr.:


The jurisdiction permitted is circumscribed in the Bankruptcy Code.

Antonin Scalia:

You mean no court has ever issued a judgment which went beyond what the court could do, legally?

Robert F. Tyler, Jr.:

That was not the case presented in this situation.

The Bankruptcy Court clearly did not mean to exceed the jurisdictional grant in 505.

Antonin Scalia:

Well, nobody ever means to do that, but the question is whether it did so.

Whether the text of the judgment was clear enough that it meant to cover even subsequent... subsequent taxation such as was involved here.

Isn't that simply a question of construing the judgment?

Robert F. Tyler, Jr.:


The Bankruptcy Court construed the judgment to the contrary.