FILED
JUL 8 2020
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. HI-18-1197-GBS
SARAH MARGARET TAYLOR,
Debtor.
Bk. No. 1:16-bk-1101-RJH
SARAH MARGARET TAYLOR,
Appellant,
v. MEMORANDUM*
U.S. BANK, NATIONAL ASSOCIATION;
DEPARTMENT OF TAXATION, STATE
OF HAWAII; ELIZABETH A. KANE,
Trustee; SUSAN LEE FENTON;
CHRISTIAN FENTON; DAVID E.
MCALLISTER,
Appellees.
Appeal from the United States Bankruptcy Court
for the District of Hawaii
Robert J. Faris, Chief Bankruptcy Judge, Presiding
Before: GAN, BRAND, and SPRAKER, Bankruptcy Judges.
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
INTRODUCTION
Chapter 71 debtor Sarah Taylor (“Debtor”) appeals the bankruptcy
court’s order approving a settlement between the chapter 7 trustee,
Elizabeth A. Kane (the “Trustee”), and the Hawaii State Department of
Taxation, Hawaii State Judiciary, Hawaii State Public Utilities Commission,
and Hawaii State Bureau of Conveyances, Department of Land Natural
Resources (together the “State Parties”). The settlement provided for the
release of claims asserted by Debtor against the State Parties and for the
withdrawal of proofs of claim filed by the Department of Taxation against
the estate.
Debtor offers no argument why the bankruptcy court abused its
discretion in approving the settlement, and we discern no error.
Accordingly, we AFFIRM.
FACTS2
In July 2014, creditor U.S. Bank, N.A. (“US Bank”) filed an action
against Debtor in Hawaii state court (the “Foreclosure Action”) seeking to
foreclose the mortgage on Debtor’s residential property (the “Property”). In
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, and all “Rule” references are to the Federal
Rules of Bankruptcy Procedure.
2
We exercise our discretion to review the bankruptcy court’s docket and
relevant proceedings. See Rivera v. Curry (In re Rivera), 517 B.R. 140, 143 n.2 (9th Cir.
BAP 2014), aff’d in part & dismissed in part, 675 F. App’x 781 (9th Cir. 2017).
2
the Foreclosure Action, Debtor filed a counter-complaint against US Bank,
and a cross-complaint for various claims against the State Parties and other
defendants.3 Debtor did not serve the cross-complaint on the State Parties,
and eventually it was dismissed. In July 2015, Debtor filed suit in the
district court, asserting the same causes of action against the State Parties,
US Bank, and other defendants. The district court dismissed Debtor’s
complaint in September 2016.
In October 2016, Debtor filed a chapter 13 petition. After the
bankruptcy court denied confirmation of Debtor’s chapter 13 plan, she
voluntarily converted the case to chapter 7, and the Trustee was appointed.
In April 2019, the Trustee filed a motion seeking approval to settle
estate claims against US Bank (the “US Bank Settlement”). The US Bank
Settlement provided that the Trustee would sell the Property, pay the
estate $50,000, and pay the remaining proceeds to US Bank in satisfaction
of its secured claim. The parties agreed to dismiss the Foreclosure Action
3
Debtor asserted claims for: (1) Disability Discrimination; (2) Torture;
(3) Conspiracy to Torture to Take Home & Employment; (4) Violations of Hawaii Rules
of Professional Conduct ‘Candor’; (5) Violation of Foreclosure Mediation Laws;
(6) Deception on Courts; (7) Storm Policy Fraud; (8) Failure of Hawaii Courts, State and
County of Hawaii, and Mayor to Preserve Federal ADAA, FHA, EEOC, EECC, & Many
Federal and State Laws; (9) Failure to Provide Equal Access to Federal Courts &
Protections Giving No Way for Timely Filing; (10) Violation of Rights to Rehab and
Employment; (11) Robotic Loan Servicing in Violation of ADAA rights; (12) Fraud on
Bureau of Conveyances; (13) Deceptive: Lending, Servicing, Accounting, Loan
Modification violation of US Constitution; (14) Failure to Provide Law Enforcement of
Bureau of Conveyances; and (15) Violation of the US Constitution.
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and release all claims. After a hearing on the motion, the bankruptcy court
approved the US Bank Settlement over Debtor’s objection. Debtor did not
appeal.
The Trustee then filed a motion to approve a separate settlement with
the State Parties (the “State Parties Settlement”). The State Parties
Settlement provided for the estate to release all claims against the State
Parties and for the Department of Taxation to withdraw its proofs of claim
against the estate without prejudice to its right to assert non-discharged
claims against Debtor or to collect on such claims outside of bankruptcy.4
The Trustee stated that she believed the estate’s claims against the State
Parties were frivolous. She argued that the settlement was fair and
equitable, and in the best interests of the estate.
In July 2018, the bankruptcy court conducted a hearing on the
Trustee’s motion to approve the State Parties Settlement. Debtor argued
that she was discriminated against by the State Parties and the Trustee, and
requested additional time to respond to the motion and to appeal. The
bankruptcy court reasoned that additional time would not change the fact
that the settlement provided a tremendous benefit to the estate. The court
considered the factors listed in Martin v. Kane (In re A & C Properties), 784
4
The Department of Taxation filed two proofs of claim against the estate for
unknown income, general excise, and transient accommodations taxes for several years
in which Debtor failed to file returns.
4
F.2d 1377 (9th Cir. 1986) and approved the settlement. The court entered an
order granting the Trustee’s motion and Debtor timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.
ISSUE
Did the bankruptcy court abuse its discretion by approving the
settlement between the Trustee and the State Parties?
STANDARD OF REVIEW
We review an order approving a compromise for abuse of discretion.
Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re Mickey Thompson Entm't
Grp., Inc.), 292 B.R. 415, 420 (9th Cir. BAP 2003).
A bankruptcy court abuses its discretion if it applies the wrong legal
standard, or misapplies the correct legal standard, or if it makes factual
findings that are illogical, implausible, or without support in inferences
that may be drawn from the facts in the record. See TrafficSchool.com, Inc. v.
Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011) (citing United States v. Hinkson,
585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)).
DISCUSSION
Pursuant to Rule 9019, “[o]n motion by the trustee and after notice
and a hearing, the court may approve a compromise or settlement.” The
bankruptcy court can approve a settlement only if it is “fair and equitable,”
5
and “reasonable, given the particular circumstances of the case.” In re
A & C Props., 784 F.2d at 1381 (citations omitted). The bankruptcy court is
not required to conduct a mini trial on the merits of the claims. United
States v. Alaska Nat’l Bank of the N. (In re Walsh Constr., Inc.), 669 F.2d 1325,
1328 (9th Cir. 1982). In deciding whether a settlement is fair and equitable,
the court must consider:
(a) The probability of success in the litigation;
(b) the difficulties, if any, to be encountered in the
matter of collection;
(c) the complexity of the litigation involved, and the
expense, inconvenience and delay necessarily
attending it;
(d) the paramount interest of the creditors and a
proper deference to their reasonable views in the
premises.
In re A & C Props., 784 F.2d at 1381. These factors “should be considered as
a whole to determine whether the settlement compares favorably with the
expected rewards of litigation.” Greif & Co. v. Shapiro (In re W. Funding,
Inc.), 550 B.R. 841, 851 (9th Cir. BAP 2016).
On appeal, Debtor does not provide any argument relevant to the
bankruptcy court’s approval of the State Parties Settlement. Instead she
argues the merits of her claims against US Bank. Those claims became
property of the estate upon Debtor’s bankruptcy filing and they were
settled by the Trustee in the US Bank Settlement. Debtor did not appeal the
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order approving the US Bank Settlement and we therefore lack jurisdiction
to review it. See Wilkins v. Menchaca (In re Wilkins), 587 B.R. 97, 107 (9th Cir.
BAP 2018) (“the 14-day time deadline in Rule 8002(a) is a jurisdictional
requirement that acts as an immutable constraint on our authority to
consider and hear appeals”).
With regard to the State Parties Settlement, the bankruptcy court
correctly applied the A & C Properties factors and determined that (1) the
estate would be unlikely to prevail on the claims, (2) litigation would be
expensive, and (3) creditors would benefit from the Tax Department’s
withdrawal of claims. Although Debtor might indirectly benefit from
allowance of non-dischargeable tax claims, withdrawal of those claims is
clearly in the “paramount interest of the creditors.” In re A & C Props. 784
F.2d at 1381. The court did not abuse its discretion in approving the State
Parties Settlement.
CONCLUSION
For the reasons set forth above, we AFFIRM the bankruptcy court's
order approving the State Parties Settlement.
7