High court blocks builder's tax-refund bid

NVR Homes suit asks $6 million from Md., local governments

Litigation

January 19, 2000|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON -- The Supreme Court blocked an attempt in federal court yesterday by Maryland builder NVR Homes Inc. to collect a refund of about $6 million in taxes and interest from Maryland state and local governments.

The Supreme Court refused to consider the homebuilder's appeal, in which NVR Homes claimed that it did not have to pay transfer and recording taxes to Maryland state and local governments during the time it was in bankruptcy proceedings and reorganizing.

NVR Homes was claiming a total refund of $6.3 million, plus about $500,000 in interest, in the federal suit and a companion lawsuit in Maryland courts.

Despite the Supreme Court's action yesterday, NVR Homes may be able to recover less than $1 million of the total in the pending state case. But Maryland officials will contest even that amount.

The 4th U.S. Circuit Court of Appeals in Richmond, Va., ruled in July that the state of Maryland could not be sued in federal court for such a refund, but that immunity does not extend to county or city governments.

No government at any level, the appellate court said, is obliged to refund taxes paid while NVR Homes' bankruptcy case was still in federal court. At most, that court said, NVR can seek refunds for taxes paid after its reorganization is approved by a federal judge.

NVR Homes, besides trying to regain the taxes through its federal court lawsuit, also has sued for refunds in Maryland Tax Court. Those proceedings have been delayed pending Supreme Court action in the federal case.

Maryland Assistant Attorney General Julia Melville Andrew, who represents the state's judiciary in court cases, said yesterday that state officials believe that the amount that remains at issue in state proceedings -- the amount collected after bankruptcy reorganization was completed -- is "something less than $1 million."

But, she added, the state and county governments will argue in the tax court that NVR Homes should get no refund.

The company, a major homebuilder in Maryland, Virginia and other Atlantic Coast states, ran into financial difficulty after it took over Ryan Homes in 1987.

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