FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: OMER L. RAINS, 

OMER L. RAINS, No. 03-16538

Appellant,  D.C. No.

v. CV-03-00388-GEB

KENNY W. FLINN,

Appellee. 

In re: D.W. AND O.L. RAINS, 

OMER L. RAINS,

Appellant, No. 04-15743

v. D.C. No.

KENNY W. FLINN,  CV-03-01524-GEB

Appellee, OPINION

and

OFFICE OF THE UNITED STATES

TRUSTEE,

Trustee. 

Appeal from the United States District Court

for the Eastern District of California

Garland E. Burrell, District Judge, Presiding

Argued and Submitted

February 8, 2005—San Francisco, California

Filed November 8, 2005

15207
Before: J. Clifford Wallace, Johnnie B. Rawlinson, and

Jay S. Bybee, Circuit Judges.

Opinion by Judge Rawlinson

15208 IN RE: RAINS
COUNSEL

George C. Hollister, Sacramento, California, for debtorappellant Omer L. Rains. 

IN RE: RAINS 15211
Gregory J. Hughes, Roseville, California, for trustee-appellee

Kenny W. Flinn. 

OPINION

RAWLINSON, Circuit Judge:

These consolidated appeals arise from the bankruptcy

court’s approval of, and subsequent enforcement of, a settlement agreement resolving adversary proceedings brought by

the trustee-appellee and a creditor against the debtorappellant. Because we conclude that the settlement agreement

was valid, and that enforcement of the agreement was proper,

we affirm the district court’s decision upholding the approval

of the settlement agreement. Although the district court erred

in ruling that the appeal of the judgment enforcing the settlement was untimely, we affirm the entry of judgment in favor

of the trustee. 

I. BACKGROUND 

A. The Settlement Agreement

Omer L. Rains is an attorney and a debtor in bankruptcy.

Kenny W. Flinn is the bankruptcy trustee. In September 2002,

the bankruptcy court appointed a mediator in connection with

adversary proceedings involving Rains, Flinn, and a creditor.

A settlement conference was held on September 23, 2002, and

after a full day of negotiations, the parties reached a settlement agreement (settlement or agreement). The agreement

was reduced to writing and the parties (including Rains) and

their attorneys signed it. 

Pursuant to the terms of the settlement, Rains and his wife,

also a debtor, agreed to pay the trustee $250,000 by March 31,

2003. Upon timely payment, the trustee and the creditor

15212 IN RE: RAINS
agreed to dismiss the adversary proceedings and withdraw

their objections to claimed exemptions from the bankruptcy

estate. Among the exemptions claimed by Rains was his interest in a retirement plan sponsored by the American Bar Association (retirement plan). The agreement alternatively

provided that:

[i]n the event that payment is not timely made by the

defendants, judgment shall be entered denying the

debtors’ discharge and an order shall be entered

denying the debtors’ exemption claim to the ABA

pension plan up to the amount of $250,000 unless

before the due date for payment the debtors have

posted an irrevocable standby letter of credit . . . (or

other instrument or collateral acceptable to the

trustee and to [the creditor]) to support the $250,000

payment. 

B. The First Appeal (Court Approval of the

Settlement)

Immediately following the conclusion of the mediation,

Rains drove himself to a hospital emergency room where he

was admitted and diagnosed with a ruptured cerebral aneurysm, sub-arachnoid hemorrhage, and stroke. Rains underwent surgery the next day and was placed in the intensive care

unit for approximately one month prior to his eventual discharge from the hospital. Rains claims to have no recollection

of the events preceding his hospitalization. 

Sometime after Rains underwent medical treatment, counsel for Rains informed the trustee’s attorney that Rains did not

intend to comply with the settlement agreement. This development prompted the trustee to file with the bankruptcy court

a Motion for Court Approval of Settlement; for Enforcement

of Settlement; and for Entry of Judgment Thereon (motion to

approve). In support of the motion, the trustee submitted a

declaration in which he stated that he had personally observed

IN RE: RAINS 15213
Rains at the settlement conference. According to the trustee,

“Rains evinced a clear understanding of what was transpiring,

the issues inherent in the settlement process, and the terms of

the agreement as it evolved.” 

Rains opposed the motion to approve and sought rescission

of the agreement on the ground that he was not mentally competent to enter into a contract at the time the agreement was

negotiated and signed. In his opposition, Rains expressly

“consent[ed] to the Court’s resolution of any disputed material fact issues pursuant to Federal Rule of Evidence 43(e) as

made applicable by Federal Rule of Bankruptcy Procedure

9017.” Rains submitted several declarations in support of his

contention that he was mentally incompetent, including those

of a neurologist who treated him for the aneurysm and a clinical psychologist who provided follow-up care. The neurologist opined that “Mr. Rains would have been without the

mental capacity to engage in business affairs on September

23, the date of his hospital admission, and for a number of

days on each side of that date.” The psychologist concurred,

stating that at the time Rains negotiated the settlement, he

“would not have had his normal mental capacity and would

have been incapable of conducting business affairs with competence.” 

The trustee filed a reply controverting Rains’s contention

that he was mentally incompetent during the settlement conference. Accompanying the reply was a declaration from

Gregory J. Hughes, counsel for the trustee. Hughes stated that

he had a chance to observe Rains at the settlement conference.

According to Hughes, Rains participated actively in the negotiations, arguing over the due date for a cash payment and

over the use of funds in his retirement plan as security for the

payment. After the settlement was reduced to writing, Rains

reviewed the document carefully and asked his attorney questions about it. Hughes’s overall impression also was that “Mr.

Rains evinced a clear understanding of what was transpiring,

the issues inherent in the settlement process, and the terms of

15214 IN RE: RAINS
the settlement as it evolved.” Rains’s creditor and her attorney

submitted similar declarations. 

The bankruptcy court heard oral argument on the motion to

approve the settlement agreement, but did not hold a separate

evidentiary hearing. After taking the matter under advisement,

the bankruptcy court issued oral findings of fact and conclusions of law and announced that it was not “persuaded that

[Rains] lacked the capacity to enter into an agreement.” The

court ruled from the bench, granting the motion to approve.

Its decision was memorialized in a minute order entered on

February 20, 2003 (settlement order). 

Rains filed a notice of appeal from the order approving the

settlement agreement, and elected to have the appeal heard by

the district court. The district court affirmed the bankruptcy

court’s decision, and Rains appealed. 

C. The Second Appeal (Court Enforcement of the

Settlement Agreement)

While the first appeal was pending before the district court,

Flinn filed an ex parte application for entry of judgment pursuant to the terms of the settlement agreement. This request

was prompted by Rains’s failure to pay $250,000 by the

March 31, 2003 due date. The bankruptcy court entered judgment in favor of Flinn, ruling that Rains’s “claim of exemption against the ABA Retirement Plan is hereby denied up to

the sum of $250,000.00, and $250,000.00 of the funds in that

Retirement Plan is hereby held to be property of the Chapter

7 estate.” The judgment further required Rains to “forthwith

withdraw the sum of $250,000.00 from the ABA Retirement

Plan, and . . . pay said amount to the Trustee immediately

upon receipt.” 

Rains filed a Motion to Alter or Amend Judgment (motion

to amend judgment) in the bankruptcy court, contending that

the court exceeded its jurisdiction when it declared that

IN RE: RAINS 15215
$250,000 of the ABA retirement plan was part of the bankruptcy estate and ordered Rains to pay that amount from the

retirement plan to the bankruptcy trustee. The bankruptcy

court heard oral argument and denied the motion. Although

the first appeal was pending in district court, neither party

notified the district court of these later developments in bankruptcy court. Rains subsequently appealed the bankruptcy

court’s order denying the motion to amend judgment and its

judgment enforcing the settlement agreement. Once again,

Rains elected to have the appeal heard by the district court. 

The district court’s rationale for the disposition of this second appeal rested on a complicated interplay of procedural

rules involving both the first and second appeals. Finding that

the second appeal also challenged the order approving the settlement agreement, rather than merely challenging its enforcement, the district court altered the analysis of its prior ruling

and determined that the original order approving the settlement agreement was not final after all.1

 The court reasoned

that because the first appeal was taken from what proved to

be an interlocutory order, it was premature, and should be

treated as having been filed on the day the final judgment was

entered, pursuant to Fed. R. Bankr. P. 8002(a).2 As the prema1The district court explained that in its prior ruling, it considered the

order approving the settlement agreement as final under our “pragmatic

approach to finality in bankruptcy cases.” See Alexander v. Compton (In

re Bonham), 229 F.3d 750, 761-62 (9th Cir. 2000) (describing bankruptcy

court order as final where it “resolve[d] and seriously affect[ed] substantive rights” and “finally determine[d] the discrete issue to which it [was]

addressed”) (citations omitted). The district court’s ruling can be traced to

the fact that the parties failed to notify the district court of the subsequent

proceedings in bankruptcy court while the appeal was pending in district

court. 

2The first notice of appeal (from the order approving the settlement

agreement) was filed on February 27, 2003. Judgment enforcing the settlement agreement was entered by the bankruptcy court on May 23, 2003.

The motion to alter or amend judgment was filed on June 2, 2003 and

denied on July 7, 2003. The second notice of appeal (from the denial of

the motion to alter or amend judgment and from the judgment enforcing

the settlement agreement) was filed on July 17, 2003. 

15216 IN RE: RAINS
ture but subsequently cured notice of appeal was deemed filed

on the date judgment was entered (May 23, 2003), but before

the motion to amend judgment was filed (June 2, 2003), the

district court concluded that the bankruptcy court lacked jurisdiction over the motion to amend judgment because of the

appeal then pending in district court. See Dressler v. The Seeley Co. (In re Silberkraus), 336 F.3d 864, 869 (9th Cir. 2003)

(observing that “the filing of a notice of appeal generally

divests the trial court of jurisdiction.”) (citations omitted). The

district court then reasoned that because the bankruptcy court

lacked jurisdiction over the motion to amend judgment, the

filing of the motion did not toll the time allowed for appealing

the judgment to the district court. Accordingly, the district

court dismissed the second appeal for lack of jurisdiction on

the basis that Rains’s notice of appeal filed July 17, 2003

seeking review of the judgment that enforced the settlement

agreement and denied the motion to amend judgment was

untimely vis-à-vis the May 23, 2003, judgment. However, the

district court’s rationale does not address the fact that the

notice of appeal filed on February 27, 2003, if premature

because it was interlocutory, would be deemed filed on May

23, 2003, the date of final judgment. See Arrowhead Estates

Development Co. v. United States Trustee (In re Arrowhead

Estates Development Co.), 42 F.3d 1306, 1310 (9th Cir.

1995), as amended; Fed. R. Bankr. P. 8002(a). The interlocutory and final orders would then merge into one judgment for

the purpose of appeal. See American Ironworks & Erectors

Inc. v. N. Amer. Constr. Corp., 248 F.3d 892, 897-98 (9th Cir.

2001). Accordingly, the notice of appeal would be timely with

respect to the February 20, 2003 order approving the settlement agreement, as well as the May 23, 2003 order enforcing

the settlement agreement.3

3Under this analysis the motion to alter or amend judgment was outside

the scope of appeal in the district court. However, because the motion to

alter or amend judgment mirrored Rains’s arguments on the merits, the

district court’s decision to exclude the motion to alter or amend judgment

from appellate consideration does not affect the outcome of this appeal. 

IN RE: RAINS 15217
II. GENERAL STANDARDS OF REVIEW 

“We review de novo a district court’s decision on appeal

from a bankruptcy court, and afford no deference to the prior

decision of the district court. We also review de novo the

bankruptcy court’s conclusions of law, including its interpretation of the Bankruptcy Code. We review the bankruptcy

court’s factual findings for clear error. Under this standard,

we accept findings of fact made by the bankruptcy court

unless these findings leave the definite and firm conviction

that a mistake has been committed by the bankruptcy judge.”

Latman v. Burdette, 366 F.3d 774, 781 (9th Cir. 2004) (citations omitted).

III. DISCUSSION 

A. The First Appeal (Appeal from the Order

Approving the Settlement Agreement) 

1. Jurisdiction 

The trustee contends that we lack jurisdiction over Rains’s

appeal from the order approving the settlement agreement

because the order was interlocutory. Thus, as a threshold matter, we must determine whether we have jurisdiction over the

first appeal. See Jeff D. v. Kempthorne, 365 F.3d 844, 849-50

(9th Cir. 2004). We conclude that we do. 

Jurisdiction over an appeal from an order of a bankruptcy

court is governed by 28 U.S.C. § 158. That section vests jurisdiction in the district court to hear appeals from “final judgments, orders, and decrees . . . and, with leave of the court,

from interlocutory orders and decrees, of bankruptcy judges.”

Id. § 158(a). The courts of appeals are granted jurisdiction

over “appeals from all final decisions, judgments, orders, and

decrees entered” by the district courts in their bankruptcy

appellate capacity. Id. § 158(d) (emphasis added). “Whether

a bankruptcy court’s decision is final . . . is a question of law

15218 IN RE: RAINS
reviewed de novo.” Silver Sage Partners, Ltd. v. City of

Desert Hot Springs (In re City of Desert Hot Springs) 339

F.3d 782, 787 (9th Cir. 2003) (citation omitted). 

[1] Although district courts have discretion to hear interlocutory appeals from bankruptcy courts, § 158(d) does not grant

courts of appeals similar discretion to review interlocutory

decisions. “The courts of appeals do not have jurisdiction to

hear interlocutory appeals in bankruptcy cases.” Silver Sage,

339 F.3d at 787. “Under 28 U.S.C. § 158(d), appellate jurisdiction exists when the bankruptcy court order and the decision of the district court acting in its bankruptcy appellate

capacity are both final orders.” In re Bonham, 229 F.3d at 761

(citations and footnote omitted). However, even if the order

approving the settlement agreement were interlocutory, we

are not necessarily deprived of jurisdiction, because “subsequent events can validate a prematurely filed appeal.”

Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1402

(9th Cir. 1988) (citation omitted). “[T]he rule in this circuit

[is] that once a final judgment is entered, an appeal from an

order that otherwise would have been interlocutory is then

appealable.” Eastport Assocs. v. City of Los Angeles (In re

Eastport Assocs.), 935 F.2d 1071, 1075 (9th Cir. 1991); see

also Special Investments Inc. v. Aero Air Inc., 360 F.3d 989,

993 (9th Cir. 2004) (“a prematurely filed notice of appeal can

be cured if the rest of the claims are disposed of in a subsequent final decision terminating the litigation”) (citation omitted). Whatever prematurity existed in Rains’s appeal from the

order approving the settlement agreement was cured by the

subsequent entry of a final judgment. See In re Eastport

Assocs., 935 F.2d at 1075. We therefore have jurisdiction to

consider Rains’s first appeal. 

2. Rains’s Mental Competency to Enter Into the

Settlement Agreement

[2] The parties agree that California state law applies to the

issue of the validity of the settlement. See Houston v. Holder

IN RE: RAINS 15219
(In re Omni Video, Inc.), 60 F.3d 230, 232 (5th Cir. 1995)

(holding that the validity of settlements in bankruptcy cases

is best resolved by reference to state contracts law); see also

Raleigh v. Illinois Dep’t of Revenue, 530 U.S. 15, 20 (2000)

(observing the “basic federal rule . . . that state law governs

the substance of claims [in bankruptcy cases]”) (citation and

internal quotation marks omitted). California law provides

that “[a] conveyance or other contract of a person of unsound

mind, but not entirely without understanding, made before the

incapacity of the person has been judicially determined, is

subject to rescission . . . .” Cal. Civ. Code § 39(a). Pursuant

to this statute, “a party is entitled to rescission of a contract

if, when he entered into the contract, he was not mentally

competent to deal with the subject before him with a full

understanding of his rights . . .” Smalley v. Baker, 262 Cal.

App. 2d 824, 832 (1968), overruled on other grounds by

Weiner v. Fleischman, 54 Cal. 3d 476 (1991). “[T]he test . . .

in each instance [ ] [is] whether he understood the nature, purpose and effect of what he did.” Smalley, 262 Cal. App. 2d at

832 (citations omitted). 

[3] Rains argues that the bankruptcy court clearly erred in

finding him mentally competent to enter into the settlement

agreement. However, the record contained sufficient evidence

to support a finding that Rains understood the nature, purpose

and effect of his actions when he agreed to settle with the

trustee and the creditor. Witnesses who personally observed

Rains during the negotiations reported that Rains participated

actively and appeared to have a full understanding of what

was transpiring and of the terms of the settlement. Rains

argued over certain terms and suggested alternatives to those

he disliked. After the settlement was negotiated, Rains

reviewed the written agreement and asked his attorney questions about it. 

[4] Rains does not seriously dispute the veracity of the witness statements offered by the trustee. Rather, he relies heavily on the opinions of his treating physician and psychologist

15220 IN RE: RAINS
that a person with his diagnosis would not have had the mental capacity to conduct business affairs at the time of the

negotiations. However, the weight to be given expert medical

testimony is within the discretion of the trier of fact. Wong Ho

v. Dulles, 261 F.2d 456, 460 (9th Cir. 1958). The bankruptcy

court was not bound to follow these expert opinions. See

United States v. Honolulu Plantation Co., 182 F.2d 172, 178

(9th Cir. 1950). In the face of conflicting testimony, the bankruptcy court did not clearly err in discounting the theoretical

speculation of Rains’s experts, or in finding that Rains was

mentally competent to enter into the settlement agreement.

See Prescod v. AMR, Inc., 383 F.3d 861, 869 (9th Cir. 2004)

(observing that the trier of fact is in the best position to

resolve conflicts in the evidence). 

3. Denial of Rains’s Request to Supplement the

Evidentiary Record

Rains contends that the bankruptcy court committed reversible error by “denying [his] verbal request at the preliminary

hearing . . . to supplement the evidentiary record to challenge

[Flinn’s] lay witness declaration testimony submitted in support of [Flinn’s] [reply].” He further asserts that the bankruptcy court’s “decision to deny Rains’ request to file

evidentiary objections” to the reply declarations violated his

procedural due process rights. 

[5] Rains’s arguments are not persuasive for five reasons.

First, Rains waived his due process claim by failing to raise

it properly before either the bankruptcy court or the district

court. In general, this Court does not consider an issue raised

for the first time on appeal. Cold Mountain v. Garber, 375

F.3d 884, 891 (9th Cir. 2004).4 Rains did not raise the issue

4There are three recognized exceptions pursuant to which we may exercise discretion to hear previously unconsidered claims: “(1) In the ‘exceptional’ case in which review is necessary to prevent a miscarriage of

justice or to preserve the integrity of the judicial process, (2) when a new

IN RE: RAINS 15221
at all before the bankruptcy court. He did not raise it before

the district court until he filed his reply brief. The district

court did not address the due process claim in its subsequent

order, undoubtedly relying on the principle that “issues cannot

be raised for the first time in a reply brief.” Coleman v.

Quaker Oats Co., 232 F.3d 1271, 1289 n.4 (9th Cir. 2000)

(citation omitted). 

[6] Second, Rains never articulated his requests with sufficient clarity to preserve the alleged error for review. For an

argument to be considered on appeal, it generally “must be

raised sufficiently for the trial court to rule on it.” Broad v.

Sealaska Corp., 85 F.3d 422, 430 (9th Cir. 1996) (citation

omitted). The closest Rains’s counsel came to asking for

expansion of the record was to complain that “[w]e get no

chance to take a whack at the reply declarations. I mean, are

you going to do that sua sponte, or should I file something or

—.” This vague statement did not adequately apprise the

bankruptcy court of the nature of Rains’s request such that the

court had an opportunity to rule on it. 

[7] Third, nothing prevented Rains from orally objecting to

the reply declarations at the hearing on the motion to approve.

However, he failed to so. At one point, Rains’s counsel stated

that “several of the declarations are replete with hearsay statements which are completely inadmissible,” but he never articulated any clear objections to specific statements made in the

declarations. Absent a contemporaneous objection, we will

review for plain error “where the integrity or fundamental

fairness of the proceedings . . . is called into serious question.” Bird v. Glacier Elec. Coop., Inc., 255 F.3d 1136, 1148

(9th Cir. 2001). That is not the case here. 

issues arises while appeal is pending because of a change in the law, (3)

or when the issue presented is purely one of law and either does not

depend on the factual record developed below, or the pertinent record has

been fully developed.” Id. (citation and alterations omitted). None of these

exceptions apply. 

15222 IN RE: RAINS
[8] Fourth, as a substantive matter, the main authority

Rains cites in support of his allegation of a due process violation is Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S.

306 (1950).5 That case simply stands for the proposition that

“[t]he fundamental requisite of due process of law is the

opportunity to be heard.” Id. at 314 (citation omitted). In that

sense, Rains was accorded his full due process rights with

respect to the motion. The declarations of the trustee and his

attorney (Flinn declarations) were filed well in advance of the

hearing. Although the declarations of the creditor and her

attorney were filed only one day before the hearing, Rains’s

counsel had received and read them by the time the hearing

took place, and they were substantially similar in substance to

the Flinn declarations. Rains had adequate opportunity to

challenge the declarations at the hearing before the bankruptcy court. 

[9] Fifth and finally, Rains expressly waived his right to a

separate evidentiary hearing when he filed his opposition to

the motion to approve the settlement.6

[10] For these reasons, the bankruptcy court did not err in

declining to allow Rains to supplement the evidentiary record.

5The only other authority Rains cites in conjunction with his due process claim is inapposite. See Ake v. Oklahoma, 470 U.S. 68, 74 (1985)

(holding that due process requires states to provide indigent defendants

with psychiatric assistance where sanity is likely to be a significant factor

at trial). 

6Rains did so pursuant to E.D. Cal. Bankr. 9014-1(f)(1)(ii), which

requires an opposition to a motion to “specify whether the responding

party consents to the Court’s resolution of the disputed material factual

issues pursuant to FRCivP 43(e) as made applicable by FRBP 9017.” 

IN RE: RAINS 15223
B. The Second Appeal (Appeal from the Judgment

Enforcing the Settlement Agreement)

1. The Bankruptcy Court’s Jurisdiction

Rains asserts that his filing of a notice of appeal from the

order approving the settlement agreement transferred jurisdiction to the district court, thereby depriving the bankruptcy

court of jurisdiction to enter the judgment enforcing the settlement agreement. We are not persuaded.

[11] We review de novo whether the bankruptcy court had

jurisdiction. Dunmore v. United States, 358 F.3d 1107, 1111

(9th Cir. 2004). It is generally true that the timely filing of a

notice of appeal divests the trial court of jurisdiction. See In

re Silberkraus, 336 F.3d at 869 (9th Cir. 2003). However, if

the order at issue is interlocutory, any appeal would be premature and would not transfer jurisdiction to an appellate court.

See Riggs v. Scrivner, Inc., 927 F.2d 1146, 1148 (10th Cir.

1991); see also United States Abatement Corp. v. Mobil

Exploration & Producing U.S., Inc. (In re United States

Abatement Corp.), 39 F.3d 563, 568 (5th Cir. 1994) (holding

that premature notice of appeal from interlocutory bankruptcy

order was of no effect).7 Rather, the trial court retains jurisdiction to enter final judgment. See Albiero v. City of Kankakee,

122 F.3d 417, 418 (7th Cir. 1997).

Additionally, the rule that a notice of appeal will divest a

court of jurisdiction “is not absolute.” Neary v. Padilla (In re

Padilla), 222 F.3d 1184, 1190 (9th Cir. 2000). For example,

a trial court retains “jurisdiction to take actions that preserve

the status quo during the pendency of an appeal,” although the

7The trustee contends that the bankruptcy court retained jurisdiction to

enter judgment because the order approving the settlement agreement was

interlocutory. We need not resolve this question because of our conclusion

that whether the order was final or interlocutory, the bankruptcy court

acted within its jurisdiction. 

15224 IN RE: RAINS
court “may not finally adjudicate substantial rights directly

involved in the appeal.” Id. (citations omitted). And “[a]bsent

a stay or supersedeas, the . . . court also retains jurisdiction to

implement or enforce the judgment or order but may not alter

or expand upon the judgment.” Id. (citations omitted).

[12] In this case, the bankruptcy court’s judgment enforcing the settlement agreement, whether considered a final order

or an interlocutory order, did not change the status quo or

materially alter the issues on appeal. The judgment merely

effectuated the express terms of the settlement agreement, and

did not alter or expand upon the order approving the settlement agreement.8

 As a result, the bankruptcy court acted

within its jurisdiction when it entered judgment, even though

Rains had already filed a notice of appeal from the order

approving the settlement agreement. 

2. The District Court’s Jurisdiction Over the Second

Appeal 

[13] We review the timeliness of a notice of appeal de

novo. Feldman v. Allstate Ins. Co., 322 F.3d 660, 665 (9th

Cir. 2003). Under the district court’s analysis, whether

Rains’s appeal was timely depends on whether his motion to

alter or amend the judgment was properly before the bankruptcy court. A bankruptcy court retains jurisdiction to consider a timely motion under Fed. R. Bankr. P. 9023 to alter or

amend the judgment, even when the motion is filed subsequent to a notice of appeal. See Fed. R. Bankr. P. 8002(b)(4);

see also Resolution Trust Corp. v. Keating, 186 F.3d 1110,

1114 n.1 (9th Cir. 1999) (interpreting analogous provision in

8The settlement agreement did not explicitly require Rains to remit

$250,000 in retirement plan funds to the trustee. However, as discussed

below, Rains’s agreement that the funds would become part of the bankruptcy estate in the event he failed to make a timely cash payment triggered a legal duty on his part to surrender the funds to the trustee. See 11

U.S.C. § 521(4). 

IN RE: RAINS 15225
Fed. R. App. P. 4(a)(4) as granting district court jurisdiction

to entertain timely motion to alter or amend the judgment

after notice of appeal is filed). The previously filed notice of

appeal does not become effective “until the entry of the order

disposing of the . . . motion . . . .” Fed. R. Bankr. P. 8002(b)(4).9

[14] Rains’s notice of appeal from the order approving the

settlement agreement, although filed prior to the motion to

amend judgment, did not divest the bankruptcy court of jurisdiction to consider that motion. See Fed. R. Bankr. P.

8002(b)(4) (listing various post-judgment motions); see also

Keating, 186 F.3d at 1114 n.1. A motion to alter or amend a

judgment must be filed within 10 days after entry of the judgment. Fed. R. Bankr. P. 9023; Fed. R. Civ. P. 59(e). The

bankruptcy court entered judgment on May 23, 2003. Rains’s

motion to alter or amend the judgment enforcing the settlement agreement, filed on June 2, 2003, was therefore timely.

[15] Rains’s notice of appeal from the entry of judgment

enforcing the settlement agreement was also timely.10 A party

9

In Keating, we stated that when a motion to alter or amend the judgment is filed, any previously-filed notice of appeal is rendered ineffective.

Keating, 186 F.3d at 1114 n.1. In so stating, we relied upon Griggs v.

Provident Consumer Discount Co., 459 U.S. 56, 61 (1982). Id. In Griggs,

the United States Supreme Court held that a notice of appeal filed before

a Rule 59(e) motion to alter or amend the judgment “simply selfdestructs.” 459 U.S. at 61 (citation omitted). This holding was effectively

overruled when “Rule 4(a)(4) [of the Federal Rules of Appellate Procedure] was amended . . . to provide that when a notice is prematurely filed,

it shall be in abeyance and become effective upon the date of entry of an

order disposing of the Rule 59(e) motion.” Schroeder v. McDonald, 55

F.3d 454, 458 (9th Cir. 1995). Thus, Rains’s notice of appeal from the

order approving the settlement agreement, rather than self-destructing

when the motion to amend was filed, was simply in abeyance. 

10Because of the unique manner in which this case proceeded through

the bankruptcy court and the district court, there are two operative notices

of appeal. The first notice addresses the order approving the settlement

agreement. The second notice pertains to the judgment enforcing the settlement agreement and denying the motion to amend the judgment. 

15226 IN RE: RAINS
wishing to appeal a decision of the bankruptcy court must file

the notice of appeal “within 10 days of the date of the entry

of the judgment, order, or decree appealed from.” Fed. R.

Bankr. P. 8002(a). A timely motion to alter or amend the

judgment under Fed. R. Bankr. P. 9023 tolls the time period

for filing a notice of appeal. Fed. R. Bankr. P. 8002(b)(2). In

that case, “the time for appeal for all parties runs from the

entry of the order disposing” of the motion. Fed. R. Bankr. P.

8002(b). The order denying the motion to amend judgment

was entered on July 7, 2003. Rains filed a notice of appeal ten

days later, on July 17, 2003. As a result, the district court had

jurisdiction to hear the appeal (as do we).11 The district court

erred in dismissing Rains’s appeal as untimely.12

3. Rains’s Interest in the Retirement Plan 

[16] Section 541(c)(2) of the Bankruptcy Code provides

that “[a] restriction on the transfer of a beneficial interest of

the debtor in a trust that is enforceable under applicable nonbankruptcy law is enforceable in a case under this title.” 11

U.S.C. § 541(c)(2). “The natural reading of [this] provision

entitles a debtor to exclude from property of the estate any

interest in a plan or trust that contains a transfer restriction

enforceable under any relevant nonbankruptcy law.” Patterson v. Shumante, 504 U.S. 753, 758 (1992). The United States

Supreme Court has held that an anti-alienation provision in an

11As Rains points out, the district court probably lacked jurisdiction to

reverse itself on the issue of whether the order approving the settlement

agreement was “final” for purposes of appeal, because the district court’s

reversal of its prior ruling occurred on May 18, 2004, after the prior ruling

was appealed to us on August 6, 2003. See In re Silberkraus, 336 F.3d at

869. In any event, because we review the bankruptcy court’s rulings de

novo, any error committed by the district court in determining the finality

of the settlement order does not affect our analysis. 

12However, as we may affirm on any basis supported by the record, we

nevertheless affirm the district court’s judgment in favor of the trustee, as

discussed below. See Parker N. Am. Corp. v. Resolution Trust Corp. (In

re Parker N. Am. Corp.), 24 F.3d 1145, 1151 (9th Cir. 1994). 

IN RE: RAINS 15227
ERISA-qualified pension plan constitutes such a restriction

for purposes of the § 541(c)(2) exclusion. Id. at 760. The

exclusion is permissive rather than mandatory: “a debtor’s

interest in an ERISA-qualified pension plan may be excluded

from the property of the bankruptcy estate pursuant to

§ 541(c)(2)[.]” Id. at 765 (emphasis added). A bankruptcy

court lacks subject matter jurisdiction over excluded ERISAqualified pension plan funds. In re McClellan, 99 F.3d 1420,

1423 (7th Cir. 1996). 

[17] In the settlement agreement, Rains agreed that if he

did not make a timely cash payment to the trustee or post

alternative collateral, his exemption claim to the ABA retirement plan would be denied up to the amount of $250,000.

Rains now contends that his interest in the ABA retirement

plan must be excluded from the bankruptcy estate pursuant to

the Employee Retirement Income Security Act (ERISA),13

and that the bankruptcy court therefore lacked jurisdiction to

order him to withdraw $250,000.00 in retirement plan funds

and remit it to the trustee. However, by ceding his claim of

exemption in the settlement agreement, Rains necessarily

agreed to include the retirement plan funds in the bankruptcy

estate pursuant to the “well settled rule that property cannot

be exempted unless it is first property of the estate.” Heintz

v. Carey (In re Heintz), 198 B.R. 581, 586 (B.A.P. 9th Cir.

1996); see also Owen v. Owen, 500 U.S. 305, 308 (1991)

(“No property can be exempted . . . unless it first falls within

the bankruptcy estate”) (emphasis in the original). Rains cannot now seek to exclude funds from the estate that he previously agreed were included in the estate. As a result, the

bankruptcy court’s denial of the exemption, in accordance

with the terms of the settlement agreement, triggered a legal

duty to surrender the retirement plan funds to the trustee. See

11 U.S.C. § 521(4) (“The debtor shall . . . surrender to the

trustee all property of the estate . . . .”). Thus, the bankruptcy

court acted within its jurisdiction when it ordered Rains to

1329 U.S.C. § 1001 et seq. 

15228 IN RE: RAINS
withdraw $250,000 in plan funds and remit that amount to the

trustee.14

4. Rains’s Due Process Claim

Finally, Rains claims the bankruptcy court violated his due

process rights when it ordered him to surrender the $250,000

in retirement plan funds, because the ordered relief fell outside the scope of the agreement and settlement order. Rains

arguably waived this claim by not properly raising it before

the bankruptcy court. See Cold Mountain, 375 F.3d at 891.

Regardless, Rains’s contentions that he was never given

notice of Flinn’s intention to seek payment from the retirement plan funds, and that the bankruptcy court violated his

due process rights by ordering him to surrender the funds,

have no merit.

[18] Under the Bankruptcy Code, property of the estate

generally includes “all legal or equitable interests of the

debtor in property as of the commencement of the case,” 11

U.S.C. § 541(a)(1), unless the property is excluded or

exempted under state or federal law, see e.g. 11 U.S.C.

§§ 522(b), 541(b), (c)(2). When Rains agreed to the settlement, he expressly acknowledged that his claimed exemption

of retirement plan funds would be denied up to the amount of

$250,000, and these funds would become part of the bankruptcy estate in the event he failed to make a timely cash payment. As discussed above, Rains became legally obligated to

deliver the funds to the trustee once the exemption was

denied. See 11 U.S.C. § 521(4). Therefore, the judgment was

14The United States Supreme Court’s recent decision in Rousey v.

Jacoway, 125 S. Ct. 1561 (2005) does not alter our conclusion. In Rousey,

the Supreme Court ruled that debtors may exempt assets in their Individual Retirement Accounts from the bankruptcy estate pursuant to 11 U.S.C.

§ 522(d)(10)(E). Id. at 1564. Rains does not contend that the retirement

plan funds are exempted from the estate under § 522(d)(10)(E). Rather, he

argues that the funds are excluded from the estate altogether pursuant to

11 U.S.C. § 541(c)(2). 

IN RE: RAINS 15229
consistent with the provisions of Chapter 11 of the Bankruptcy Code, the settlement agreement, and the order approving the settlement agreement, and did not violate Rains’s due

process rights.

Rains also complains that the application for entry of judgment was made without notice or a hearing. However, “[a]

bankruptcy court, as a court of equity, . . . possesses the

power to summarily enforce settlements.” City Equities Anaheim, Ltd. v. Lincoln Plaza Dev. Co. (In re City Equities Anaheim, Ltd.), 22 F.3d 954, 958 (9th Cir. 1994) (citation

omitted). The Federal Rules of Bankruptcy Procedure generally prohibit a trustee from making ex parte contact with the

court “concerning matters affecting a particular case or proceeding.” Fed. R. Bankr. P. 9003(b) (emphasis added). The

application for entry of judgment in this case did not affect a

pending proceeding, because the issues had previously been

adjudicated, and all that remained for the court to do was

enter a judgment in accordance with the order approving the

settlement agreement. See Texas Extrusion Corp. v. Lockheed

Corp. (In re Texas Extrusion Corp.), 844 F.2d 1142, 1164

(5th Cir. 1988) (concluding that the bankruptcy judge did not

violate rule against ex parte contact by adopting findings and

conclusions after communications with creditor’s attorney

because written findings merely confirmed prior verbal ruling). Thus, any ex parte contact was not improper. In any

event, Rains had sufficient opportunity to air his objections in

his motion to amend the judgment and in the hearing held on

the motion. Rains’s due process rights were fully preserved.

IV. CONCLUSION

We have jurisdiction to consider Rains’s appeal from the

bankruptcy court’s order approving the settlement agreement.

The bankruptcy court did not clearly err in finding Rains mentally competent to enter into the agreement, and properly

denied Rains’s request to supplement the evidentiary record.

The bankruptcy court had jurisdiction to enter the judgment

15230 IN RE: RAINS
enforcing the settlement agreement; Rains’s appeal from that

judgment was timely; the bankruptcy court properly ordered

Rains to remit $250,000 in retirement plan funds to Flinn; and

Rains’s due process rights were not violated. 

AFFIRMED. 

IN RE: RAINS 15231