seeks to declare invalid any lien the County may have had prior to any sale to Phoenix. This clearly implicates the levy and collection of the tax, thereby implicating the TIA and divesting this court of jurisdiction. Therefore, the court concludes that the TIA is applicable because there is no question that plaintiff has a fast, efficient remedy in state court. As this court has already noted, the state courts are perfectly capable of and do decide the issues raised by plaintiff's complaint. Indeed, plaintiff has already appeared in the state court action and can raise these issues as a defense to any effort by Phoenix to foreclose on the property or otherwise collect the taxes from plaintiff.
In Count IV, plaintiff seeks a declaration that it is entitled to a reassessment of the taxes for the years in question. This obviously implicates the assessment of taxes, and this court is divested of jurisdiction over this count by the TIA. See Fox River Valley R.R. v. Dept. of Rev. of Wisconsin, 863 F. Supp. 893 (E.D. Wisc. 1994). Accordingly, the court dismisses Counts I, II, and IV for lack of subject matter jurisdiction.
Count III is somewhat more difficult. In this count, plaintiff argues that as RTC's assignee, under Section 1825(b) it cannot be liable for any charges levied that are in the nature of penalties for failure to pay taxes. As noted above, n.1, under Illinois law, taxes, together with any penalties, interest and costs that may accrue thereon, shall be a prior and first lien on the property. 35 ILCS 200/21-76. Thus the question is whether such interest and penalties that accrue for the failure to timely pay taxes are compensatory in nature (thus considered taxes implicating the TIA), or are actual penalties. See Irving, 741 F. Supp. 120. In Irving, the court faced the identical question. It held that whether the funds in question constituted penalties or interest within the meaning of Section 1825(b)(3) is a federal question, the resolution of which is guided by reference to state law. Reviewing the relevant portions of the Texas Tax Code, the court found that they were on their face penalty provisions, and that the FDIC was not liable for their payment.
Illinois courts have consistently characterized the impositions charged on delinquent real estate taxes as an interest penalty or simply a penalty. See Kousins v. Anderson, 229 Ill. App. 3d 486, 171 Ill. Dec. 275, 593 N.E.2d 1095 (2d dist. 1992). Indeed, they have been characterized as penalties to aid in the administration and collection of taxes, not fees for the purpose of generating additional tax revenues. Village of Oak Lawn v. Rosewell, 128 Ill. App. 3d 639, 83 Ill. Dec. 904, 471 N.E.2d 203 (1st dist. 1984). Because Illinois considers the charges resulting from delinquent payment of taxes as penalties, they are not taxes and do not implicate the TIA. Therefore, the court has jurisdiction over Count III.
In addition to their TIA defense, defendants have also moved to dismiss for failure to state a claim, arguing first that § 1825 defenses are personal to the RTC and cannot be assigned to plaintiff, and second that even if assignable § 1825(b)(3) does not afford plaintiff the relief it seeks.
In its previous opinion in this case the court examined the D'Oench Duhme doctrine (see D'oench Duhme & Co. v. FDIC, 315 U.S. 447, 86 L. Ed. 956, 62 S. Ct. 676 (1942), its codification and supplementation in 12 U.S.C. § 18223, and subsequent cases that have extended the protections of the doctrine and statute to assignees of the FDIC and RTC. In that opinion this court determined that it would not further the policy behind the statute to extend the FDIC's federal jurisdictional grant to private assignees. RTC Commercial Asset Trust, 943 F. Supp. at 965-66. That policy is to encourage purchasers to acquire assets from the RTC and thus ease the RTC's ability to protect the assets of failed institutions. Requiring assignees to litigate in state court would do nothing to further that goal. Failure to extend the § 1825(b) defenses to assignees of the RTC, however, would emasculate that policy and serve to weaken RTC's ability to dispose of failed bank assets. See F.D.I.C. v. Bledsoe, 989 F.2d 805, 811 (5th Cir. 1993). Accordingly, the court concludes that plaintiff, as assignee of RTC, can assert the rights set forth in § 1825(b)(3).
That section provides that the RTC when acting as receiver shall not be liable for any amounts in the nature of penalties and fines, including those arising from the failure of any person to pay any real property tax when due. Phoenix admits that the RTC would not be liable for any penalties or fines that accrued while it was acting as receiver (July 1992 through October 24, 1995). It correctly asserts, however, that RTC (and therefore plaintiff) are responsible for any taxes, fines and penalties and are subject to any liens that accrued or attached prior to the receivership. See Irving, 741 F. Supp. 120; Carrollton-Farmers, 858 F.2d 1010 (pre-receivership liens and penalties survive receivership). Thus, to the extent that Count III seeks a declaration that plaintiff is not responsible for pre-receivership penalties and fines, the count fails to state a claim under Fed. R. Civ. P. 12(b)(6) and is dismissed.
Plaintiff also seeks a declaration that pursuant to § 1825(b)(3) no lien may attach to the Property for any penalty, interest or fine that accrued during the receivership. That section, however, contains no provisions preventing attachment of any liens, or the accrual of such penalties or fines. It simply provides that the RTC will not be liable for any amounts that may accrue. Accordingly, to the extent that the count seeks a declaration that defendants hold no liens for penalties, the count fails to state a claim and is dismissed.
Finally, because there are no material facts in dispute, the court holds that plaintiff is entitled to summary judgment on its claim that it is not liable for any interest, fines or penalties resulting from delinquent payment of taxes during the period of receivership.
For the reasons set forth above, Counts I, II, and IV are dismissed for lack of subject matter jurisdiction pursuant to the Tax Injunction Act. Those portions of Count III that seek a declaration that plaintiff is not liable for any penalties, fines or interest that accrued prior to the period of receivership, or to void any liens, are dismissed for failure to state a claim. Plaintiff is granted summary judgment on the portion of Count III that seeks a declaration that it is not liable for penalties, interest and fines that accrued during the receivership. Plaintiff's motion for summary judgment is denied as to all other counts.
ENTER: May 6, 1997
Robert W. Gettleman
United States District Judge