1 

### NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: HEARTWISE , INC. , Debtor

. BAP No. C C

- 22

- 1 0 89

- L SG

Bk. No. 8 : 20

- bk

- 13335

- SC

MEMOR AN DUM ∗ V ITAMINS ONLINE, INC. , Ap pell ant , v. HEARTWISE , INC.; UNIT ED STATE S TRUSTEE; MAGLEBY, CATAXINOS & GREENWOOD, PC , Appellee s

. Appeal from the United States Bankruptc y Court for the Cen tral District of California Scott C. Clarkson , Bankruptcy Judge, Pres i d ing

Before: LAFFER T Y, SPRAKER , and GAN , Ban kruptcy Judges.

I N T R ODUCT ION
Pre petition, c reditor Vi tamins Online, Inc. ( “ VOL ” ) ob tained a judgment (the “ Judg ment ” ) against HeartWise , Inc. in the U nited States
District Court for the District of Utah ( “ District Court ” )

. Heart W ise appealed the Judgment. VOL was represe nted for a time in th at l itigation

∗ Th is d is p o s it i on is n ot a ppro pri at e f or pu blic ation

. Alt h ou g h i t may be cited fo r wha t ever pe r su as i v e value it ma y h a ve, se e Fe d. R

. A p p

. P. 32

. 1, it has n o p recedential

v al ue , see 9t h C ir. BA P R u l e 8 024

- 1. 

# FILED

NOV 23 2022
SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT2 by Magl eby, Cataxinos & Greenwood, P.C. ( “ M CG ” ) . The engagement agreement between VOL and MCG provided that any judgment awarded would be paid to MCG, which would deduct its fees and distribute the
balance to VOL. After H eartWise filed its chapte r 11 1 cas e, VOL and MCG
each filed proofs of claim for the full J udgment amount , and each objected
to the ot her ’ s claim

. Thereafter , the bankruptcy court confirmed
HeartWise ’ s plan o f reorgan ization, which provided that HeartWise w ould deposit into the cou rt registry f unds su fficient to satisfy the J udgment but
that no distribution would be made on either claim until the appeal of the Judgment and the claim dispute w ere both resolved

. Post

- confir mation, t he bankruptcy court sustaine d MCG ’ s objection

a nd overruled VOL ’ s , finding that the engageme nt a greement cre ated a power couple d with an int erest entitl ing MCG to collect the J udgment. After a new judge was assigned to the case, the bankruptcy court granted
VOL ’ s mo tion for reconside ration . The court vacated the order s sustaining
MCG ’ s objection and overruli ng VOL ’ s , but it abstained from deciding the dispute , concluding that i ts resolution would have no impact on the estate
and that Utah courts were better suited to interpret the eng age ment agreement

. We AFFIRM.

1 Unl es s s p ec i fi e d o t her w ise, a ll ch a p te r a n d se cti on re f e re nces are to t h e B a nkr up tc y C ode , 1 1 U.S.C. §§ 10 1

– 1 5 3 2

. “ Rule ” reference s are t o the Fed eral R ules o f Ban kruptcy Proc edu re

.3 FAC TS
A. Pre

- P etition Events
HeartWise and VOL are both en gaged in the business of selling vitamins and nutritional supple ments on line. I n 201 3 , VOL su ed HeartWise
in the District Court , alleging claims f or unfair competiti on a nd false advertising under federal and state law (the “ District Cour t Action ” )

. About five years into the litigation, VOL hired MCG to replace its existing
counsel in the D istrict Court Action

. VOL and MCG executed a n engagement agreem ent , which provided f or a com b i nation of reduced hourly fees and a contingency fee. The e ngagement agreemen t provides, in relevant part: Client agrees to pay [MCG] the contingency fee at the time of
reco very. T hat is, it is the intent of the parties th at both Client and the F irm sha ll be paid at the same time, as any recovery is obtained

. . . . All payments from or collected against HeartWise or associ ated persons or entities shall be directed to [MCG] , which will deduct the contingency fee and any ou tstanding fees and costs, and then p ay the balance to Client. . . . In November 2020, t he Distric t Court awarded VOL $9,5 51,232 in damages against HeartWise plus prejud gm e n t interest and attorney s ’ fees , for an est imated total of $14.5 mill ion . T h e Judgment provides that attorney s ’ fe es wil l be determined post

- judgment

. HeartWise appealed th e J udgment , and VOL filed a cross

- appe al, arguing that it should have been awarded an additional $34 million. The appeal and cross

- appeal remain4 pending at the Tenth Circuit Court of Appe als

. 2 A lmost imme d iately after the Judgmen t was a warded, VOL terminated MCG ’ s representation

. B. B a nkruptcy Events
HeartWise filed a chapter 11 bankrupt cy petition on Dece mber 4,
2020. VOL and MCG each filed proof s of claim for $14.5 million based on the Judgment ( claim numb e rs 3

- 2 and 5

- 2 , r espectiv e ly )

. M CG ’ s proof of
claim was based on the engagement agreement, which MCG asserted
entitl ed it to receive payment of th e Jud gmen t (and any further amounts recovered) , subtract i ts fees and costs , and pay the remaining balan ce to
VOL

. 3
VOL a nd MC G each object e d to the other ’ s claims

. VOL argued that MCG was not a creditor because the Judgment was owed to VOL; MCG argued that it was entitled to payment pur suant to the engageme nt agreement. After a hearing, the bankruptcy cour t ove r ruled VOL ’ s objection and susta ined MCG ’ s

. Although no party had raised the the ory,
t he bankruptcy court sua sponte reasoned that, th rough the engageme nt agreement, VOL had gra nted MCG a n ir rev o cable power coupled with an
interest

. Under that th eory, the b ankruptcy court found that VOL had granted MC G the power , i.e., the exclusive righ t , to collect the Judgment ,

2 According to the Tenth Circuit Court of Appeals docket, the matter was argued November 15, 2022.

3 VOL and MCG als o fil ed proof s of claim for $34 million (clai m numbers 8 and 12

- 1, respectively) , representing “additional amount t hat s hould have b een awarded” in the District Court Action.5 and the inter est coupled with th at power was MCG ’ s attorneys ’ lien that arose by operation of Utah statutory or common law. 4 Alternativ ely, the
b a nkruptcy court found that the i nterest “ may be viewed as MCG ’ s rights to payment of all its fees and costs under the Engageme nt Agreement. ”
Based on th is conclusion, the bankrup tcy court found that VOL had no right to payment directly from Heart Wise

. Th e ban k ruptcy court entered

a n order dis allowing VOL ’ s claim number 3

- 2 (the “ Disallowance Order ” )
and an ord er overruling VOL ’ s objections to MCG ’ s claim number 5

- 2 ( the

“ Objection Order ” )

. In the meantime, the bankr uptcy court conf irmed HeartWise ’ s first

amen d ed chap t er 11 plan of reorgan ization. Th e confirmed plan pr ovide s for 1 00% payment to all creditors, plus po stpetiti on inter est. It provide s that HeartWise w ill depo sit $14.5 million int o the court registry for payment of the J udgment and sta tes t hat thos e funds will not be re leased

“ to M agle by ” until all appea ls of the J udgment and any subse quent proceedings ha ve been completed

. The court ’ s findings and conclusions regarding confirmation similarly state that
the Pla n provides that the full am ount of t he J udgment, [plus interest a nd attorneys ’ fees] are being deposited into t he Court’s registry pending an outcome of the obje ctions to Claim Nos. 3 and 5, and the appeal and cross

- appeal of the Judgment.

4 The bankruptcy co urt cited Ut ah Code § 38

- 2

- 7 (2) , which provides that an attorney obtains a lien on settle m ent funds for the balance of any compens ation due

. The bankruptcy court also cited Mont ague v. M cCarrol l , 49 P. 418 ( Utah 1897) , for the proposition that a power c oup led with an interest is irrevocable

.6 . . . . The Cour t has yet to determine whic h party, Magl eby or Vitamins Online, w ill be paid the Judgment, or any portion there of. And t he confirmation order states that the plan “ provides for HeartWise to
int erplead approximately $14. 5 m illion in moneys ear

- marke d to pa y the
Claim 3

- 2 or Claim 5

- 2 ( depending u pon how the interpleader is ultimately resolved). ” The bankruptcy case was a ssigned t o a new judge in February 2022 , foll o wing the previous judge ’ s retirement

. VOL then mo ved for
reconsideration of the Disallowance O rder

. VOL a rgued that it h ad been
denie d due process by not b eing permitted to brief the power coup led with
an interest the ory or to be heard o n the court ’ s factual findings

. I t also argued that the bankr uptcy court erred in disallo wing its claim because (i) MCG ’ s object ion was not based on § 502(b ) ; and (ii) the court failed to give effect to the parties ’ intentions in interpreting the engagement agreement. VOL further argued that the bankruptcy court erred in its interpr etation of the power coupled with an interest the ory as appli ed to the engagement agreemen t and, i n any event, Utah law prohibits such

a rrangement s between attorneys and their clients

. Finally, it argued that MCG lacked standing. After a hearing, th e bankruptcy court granted r econsideration , concluding that the e ng ageme n t a greement did n o t create an assignment
and that MCG ’ s right to collect did not translate into a right to payment7 (i.e., a claim) directly against HeartWise

. The court also noted tha t it was
unclear from the previous b ankruptcy judge ’ s memorandu m de cision how
the ter ms of t he e ngagement a gre e ment created an irrevocable power coupled with an interest. The bankruptcy court ordered the D isallowance
Order and the Objection Order vacated, but it permissibly absta i ned from resolving the dispute between VOL and MCG over which ent i t y has a right to payment from HeartWise , c onclud i ng that t he dispute should be adju dicated in the District Court.
In an order denying VO L ’ s motion for additional findings, the bankruptcy court clari fi ed that it did not intend the following statem ents o f
fact in the order denying r econsideration t o be limiting on the court that ultimately decides the dispute between VOL and M CG: (1) that the Utah
District Court w ould decide the amount of attorneys ’ fees ; (2) that
HeartWise ’ s appeal was pending before the U tah Distr ict Court rather than
the Ten t h Ci rcuit Cou rt of Appeals ; and (3) that an action resolving the
cl aim dispute would be adju dicated by the Utah District C ourt rather than
the state court. The bankruptcy court also stated tha t to the exten t any of

t h ose statement s were misstatements of the record, it would retract them,

not ing that any such errors were minor and ha d no bearing o n its
abstention deci sion

. The bankruptcy court also cl arified tha t it inten ded
that on ce the claims issues were resolved, t h e parties would file plead ings in the bankruptcy court to further the process of payment on the appropriate claim.8 VOL ti mely appealed. J U RIS D ICTI ON
The ba nkru p tcy court h a d ju r is dicti o n un de r 28 U.S.C. § § 13 3 4 and
15 7 (b )( 2 ) ( B )

. W e h a ve ju r isd ic tion u n d e r 28 U .S .C

. § 15 8

. I S SUE S Did the bankruptcy court err in implicit ly finding that MCG had standing? Did the bankruptc y court abuse it s discretion in abstaining from adjudicating the parties ’ rights to the funds held in the court r egistry?
S T A N DARD S OF R EVIE W
Stan d i ng is a legal issue t hat we review de novo

. Veal v. Am. Home Mortg. Servi cing, Inc. ( In re Veal ) , 450 B.R. 897, 906 ( 9 th Ci r. BAP 2011)

. W e review for abuse of discretion the b ankruptcy court ’s order regarding permi ssiv e abstentio n. Certain Underwriters a t Lloyds, Syndicates
2623/623 v. GACN, I nc. ( In re GACN, Inc. ) , 555 B.R. 684, 692 ( 9th Cir. BAP 2016)

. T o determine whethe r the bankrup tcy court abu s ed its discretion, we
conduct a two

- step inquiry: (1) we review de novo wheth er th e bankruptcy
court “ide n t ified the co rrec t leg al rule to apply to the reli ef requested ” ; and (2) i f it did, we co nsider wh ether the bankruptcy cour t ’ s applicati on o f the leg a l standard was illogical, imp lausible, or without sup port in inferences
that may b e drawn from the facts i n the record. Uni ted S tates v. Hi nkson , 585
F.3d 1 247, 1262 (9 th Cir. 2009 ) (en banc).9 DISC USS I O N It is not clear what VOL hopes to accomplish in bringing this appeal. Althoug h VOL argues that the bankruptcy court abused i ts discret ion in abstaining, VOL c ontends that the bankruptcy court erred in not deciding
the claim s dispute in VOL ’ s favor , and it takes the position that it could be paid immediately should we so find. As such, VOL fo cuses much of its argument on the me rits of the dispute

. But th e prima r y issue in this appeal is whether the bankruptcy court appropriately a bstained from hearing the dispute; the merits are not before us. Oddly enough, V OL also argues that the bankruptcy court lacked subject matter jurisdic tion over the dis pute. If anything , t he bankru ptcy court ’ s or der was favorab le to V OL in
that it granted VOL ’ s motion for reconsider ation , which simply put the parties back in the position they wer e in before t he initial ruling on the claim objections , lea ving the m free to litigate their dispute elsew here

. VOL ’ s appeal seems counterproductive given its comp laint that the abstention ruling is delaying distribution of the Judgment proceeds

. As discussed below, we see n o abuse of discretion in the bankruptcy c ourt ’ s decision to abstain.
A. VOL ’ s m oti on to modify t he record on appeal or for j udicial notice is denied. A s a threshold matter , we addr ess VOL ’ s motion to modify the
record on appeal, o r in the alternative, its request for judic ial notice with respect to sev eral doc ume nts that were not inclu ded in its excerpts of10 record but are all available on the bankruptcy c ourt ’ s docket

. VOL argues
th at several of th os e documents are material to the decision in this app eal,
while the remain in g do c uments provide “ undis pute d backgroun d and
context to the is sues o n appeal. ” VOL also contends that some of the
documents are relevant to show that Heart Wise a dvanced certain arguments in the bankruptcy court that are contrary to those as serted on
ap peal. HeartWise and MCG each fil ed objectio ns to the motion on the
groun d that permitting suppl ementation of the record at this time would be pr e judicial

. Although we have discretion to permit supplementation of t he record, see Rule 8009, 5 we find it unnecessary to our resol ut ion o f th is appeal. We note that some of th e docu ments we re included in MCG ’ s

ex cer pts of the reco rd. In any event , we have discretion to take judicial
notice of documents electronically filed in the underlying bankruptcy case , and we have done so here, as ap pr o pri ate. See At wood v. Chase Manhattan Mortg . Co. (In re Atwood) , 293 B.R. 227, 233 n.9 (9th Cir. BA P 2003). VOL ’ s motion is thus DENIED.

5 Rule 8009 (e) ( 2) provides, in relevant part, “[ i]f anything material to either party is omitted from or misstated in the record by error o r accident, the omissi on or misstatement ma y be correct ed, and a supplemental reco rd may be certi fied and transmitted:

. . . (C) by the court where t he appeal is pen ding.11 B. MCG ha d standing in the bankrupt cy court

. V OL contends that the bankruptcy court should have found that
MCG lacked st a nding to ob ject to VOL ’ s claim , an issue that VOL raised in
its motion for recon sideration . V OL contends that MCG lack ed
consti tution al standing, prudential standing, and statutory standing. V OL
also contends that because MC G lacked s tanding, the bankrupt c y cour t had no jurisdiction to det ermine MCG ’ s claim objection.
But VOL ’s standing arguments are premised upon the notion that
MCG has no valid claim in the HeartWise bankruptcy , which has yet t o be
determined

. T he va catur of th e Disall owance O rder , sta n ding alone, did

not result in the disall ow ance of M C G ’ s claim ; the ban kruptcy court explicitly abstained from that determination

. Unl ess and until it is
determined that MCG has no right to the fund s being he ld in the court registry , it has standing

. C. The b ankruptcy co urt did not abus e its discretion in permi ssive ly abs t aining

. Pur suant to 28 U.S.C. § 1334 ( c ) (1) , a bankruptcy cour t may abstain from hearing a matter over which it has jurisdiction under 28 U.S.C. § 1334 ( a) and (b)

. Subsection (c)(1) of 28 U.S .C. § 1334 p rovides , in rele vant
p art, “ nothing in this section prevents a di strict court in the interest of justice, or in the interest of comity with State courts or respect for State law,
from abs taining from hearing a parti cular proceeding arisi ng unde r title 11

o r arising in or relate d to a case under title 11. ”12 In determin i ng whether permissive abstention is appropriate, co urts generally consider the following factors : (1) the effect or lack t hereof on the efficient administration of the esta te if a C ourt recom mends abstention , (2) the ext ent to which state law issues predom inate over bankruptcy issues, (3) the difficulty o r unsettled nature of the applicable law, (4) the presence of a re lated proceeding commenced in state court or other non bankruptc y cou rt, (5) the juri sdicti onal ba sis, if any, other than 28 U.S.C. § 1334, (6) the degree of relatedness
o r remoteness of the proceeding to the main bankruptcy case, (7) the substance rather than form of an asserted ‘core’ proceeding, (8 ) the feasibility o f severing state law c laims f rom
core bankruptcy mat ters to allow judgments to be entered in state cou rt with enfor cement left to the bankruptcy court, (9) the burden of [the bankruptcy c ourt’s] docket, (10) the likelihood that the comme ncement of the pro c eeding in b ank ruptcy court involves fo rum shopping by one of th e parties, (11) the existence of a right to a ju ry trial, and (12) the presence in the proceeding of non debtor parties. E astport Assocs. v. City of L os Angeles , 935 F.2d 1071, 10 75

- 76 (9th Cir . 1991) (quoting Christe nsen v . Tucson Est s. , I nc. (In re Tucson Est s. , I nc.) , 912 F.2d 1162, 1167 (9th Cir. 1990) (quo tati ons and additional citations omitted )

. Th e bankruptcy court ana lyze d the se fact or s and determined that
the y weighed in fa vor of abst ention. Specifically, th e cour t found that , because the plan ha s b een sub stantially consummated , and funds hav e been set as ide to pay which ever party is determined to be entitled to them,
abst ention would have no impact on the effective administr ation of t he

estat e. Next, it corr ectly found that the dispute revolved entire ly around13 state l aw issues. The cour t also found that t he Utah District Court was
better suited to resolve th e issue of who has the rig ht to payment of the Judgment and that having the mat t er reso lved there would allev iate the burden on the bankruptcy cour t to r esolve a no n
- bankruptcy matter.
VOL argues that the bankruptcy court erred in not addressing MCG ’ s standing

. But w e have reject ed V OL ’ s sta nding argument above

. In the
alter native, VOL argu es that, if MCG ha d s tanding, the bank ruptcy court
had an “ unflagging obligation ” to adju dicate the di spute. It ci te s cases from the Supreme Co urt an d the Ni nth Circ uit , which stand for the proposition
that abstention is the excepti on , not the rule , and th at abste ntion should be exercised only in exceptional circums t an ces

. See Sprint Commc ’ ns , Inc. v. Jacobs , 571 U.S. 6 9, 7 7 (2013); Allegheny Cnty. v. Frank Mashuda Co. , 3 60 U.S. 185, 188

- 89 ( 1 959) ; Ctr

. F or Biological Diversity v. U.S. Forest Se rv. , 925 F.3 d 1041, 1050

- 51 ( 9 th Cir. 2 019)

. V OL argu es that abstention will result in the parties ’ time and resources being wa sted , but i t cite s no case law holding
that this alon e is a reason to retain jurisdiction . And the ir “ unflagging
ob ligation ” argument makes n o s ense given that the plan has been
confirmed , s o the resolution of the di spute would have no impact on the bankruptcy estate

. In fact, in VOL ’ s reply brief, it ar gues that the bankruptcy court l acked subject matter jurisdiction over MCG ’ s claim

o bjection for this very reason. Next, VOL argues that the bankruptcy cou rt erred in abstain ing in the absence of a parallel stat e cour t proceeding , citing Schulman v.14 Cali fornia , 237 F.3d 967, 981 ( 9 th Cir. 2001) , and Security Farms v. Int ernational B rothe rh oo d of Teamsters , Chauffers, Warehousemen & He lpers , 124
F.3d 99 9, 1009 ( 9 th Cir. 1997)

. 6 Although this is a correct sta tement of the
rule articulated in those cas es, the y are distinguishable. See Moore v. Hatfield (I n re Hatfield ) , No. 08

- 3 140 T C, 2009 WL 2849538 , at *2 (B ankr. N. D. Cal. 2009)

. In Ha tfield , the b ankrupt cy c ourt denied reconsideration of its orde r abstaining from hearing an adver sary proceeding that involved state law
cl aims between non

- debtor parties

. In its ruling, the bankruptcy court he ld
that the absen ce of a parallel s tate court proceeding wa s not f atal to its
decision to abstain. Id. The court pointed out that t he ho l dings of Lazar and Security Farms were based on the procedural posture of those case s

— the respective state court pro ceeding s had been re moved to th e bank ruptcy

court , thus extinguish ing tho se proceedings. T he Ninth C ircui t held that, in that context, the b ankrup tcy court ’ s decision whether to keep th ose proceeding s was governed by the sta tutes and rules governing remand of removed proceedi ngs, rather than by the more g eneral provisions
gover ni ng abstention

. Sec. Farms , 124 F.3d at 1009

- 10

. The Hat fi eld cou rt not ed that t he Ninth Circuit expressly stated in
Tucson Estates that the pendency of another proceeding is only a factor in
determini ng whether to remand , and in E astport Associates , alt hough no

6 Although the District Court case has been closed, the Judgment provides that the fi nal amount of attorney ’ s fees and costs are to be determined post

- ju dgment.15 state court action was pending, “ the Ninth Circuit treated that fact merely as a consideration weighing against abstention, and not as a bar a gainst
abstention. ” In re Hatfi e ld , 2009 WL 2849538, at * 2 (cit ing Eastport Assoc

. , 935
F.2d at 1078 )

. 7
VOL also c omp lains that ban kruptcy court analyzed only three out of
the t welve factors and that it assumed several fact s “ that it later retracted ”
but did n o t revisit its analysis

. Co n trary to VOL ’ s asse rt ion, the bankruptcy

court ’ s fi ndings explicit ly add ressed the first, second, f ourth , ninth , and
twelfth Tucson Estates fac to rs . And its other findings implicitly address
most of the other factors. For e xample, in analyzi ng the D is allo w ance Order , the ban kruptcy court concluded that i t was unclear fr om t he case law that the terms of the engagement letter vested an interest in MC G such that MCG could pursue payment ag ainst HeartWise (factor three : difficulty
or unsettled nature of applic able state law ) . The ban kruptcy court also impl icitly fou nd that the di spute was only peripherally re lated to the main bankrup tcy case and , despit e the core nature of a claims allowance
pro ceeding , HeartWise wou ld be entirely unaffected by the outcome of t he dispute (factor s six and seven : degree of relatedness o r remoteness of the

7 VOL also cites our unpublish ed decision in Skyline Ridge, LL C v. Cinco Soldados, LLC (I n re Skyline Ridge, LLC ) , BAP No. AZ

- 21

- 11 08

- LBS , 2022 WL 8847 24 ( 9 th Cir. BAP Mar. 23, 202 2) , in which we re l ied on Laz ar and Security Farms in holding that a bstention provisions did no t apply bec a use there was no par allel state court proceeding. But t h e facts of Skyline Ridge were analogous to th os e in Lazar and Security Farms bec ause the issu e wa s not abs tentio n, but whe ther the matter should be remanded

.16 proceeding to the main bankruptcy case and substance rather th an for m of
an asserted core proceeding )

. A lthough the bankrup tcy court should consid er all twelve factors, one shou ld not be begui led i nto a false sense that a head count will yield the answer with mathematical certainty. Rather, the list serves to provid e an i ntellectual matrix to g uide the judge who considers abst ention and to enable a reviewing court to ascerta in wh ether there has be en an abuse of discretion. Fidelity Nat’l Title Ins. Co. v. Franklin (In re Franklin) , 179 B.R. 913, 928 (Bankr. E.D. Cal. 1995) (citing Eastport Assoc s. , 935 F.2d at 1075 )

. In our
vie w, the bankruptcy court addressed the relevant fa ctors sufficiently t o

s up port its ruling . And VOL does not address how the bankruptcy court ’ s

c larifications regarding what cou rt could decide th e matt er should have made any differen ce to the analysis.
V OL also contends that the bankruptcy court erred in find ing that the
di spu te was a two

- party dispute, arguing that HeartWise is necessarily a party to the dispute because it will have to pay the c laims if allowed (a t the same time, VOL argues that Heart Wise has no standing in this appeal ). 8
But VOL doe s not add ress how the resolut i on of the dispute will impact
the estate. VOL assert s that the bankruptc y c ourt ’ s finding means that the

8 In its reply brief, VOL asser ts that H eartWise lacks standing in this appeal and is judicially estopped from arguing that VOL’s claim will not be deemed allowed unless and until VOL prevai ls in the Ten th Circui t appeal because it previously too k the position that the claim was nonc ontingent . We have not relied on HeartWise ’ s arguments in resolving this appeal. T herefore , we need not address its standing

.17 dispute is a n on
- co r e matter , which is error because it is a core matter concerning claims allowance

. But the bankruptcy court imp licitly, and

cor rect ly, found that, while the dispute was oste nsibly a core procee din g,
its substance was a two

- party dispute that did not i mpact the estate.
V OL also assign s error t o the bankruptcy court ’ s abstention decision
because its impact was to delay distribut ion on the claim s at issue , which it

conte nds violates the confirmati on order. It states that the bankruptcy court

“ indicated t hat Cl aim 3 would be paid from the Court ’ s registry without

awa itin g resolu tion of any proceedings before the Ten th Circuit,” cit ing
lan guage from the confirmation order in which the bankruptcy cour t explained wh y granting a stay of t hat order , which was r equest ed by

a nother credi tor, would prejudice other creditors and HeartWise : There would seem to be a powerful incentive for VOL not to appeal an order confirming the Plan becau se by dec lining to
a ppe al (and assuming VOL can o vercome an objection to

. . . one of its claims by its former attorneys), VOL would stand to get paid approximately $14.5 milli on in cash in rel atively short
or der and to continue to litigate its claimed entit lement to an additio nal $54 million. But this verbiage does not order anyth ing , and w e fail to see how it supports V OL ’ s arguments. The language in the confirmation order that explicitly relat es t o the claims di spute is arguabl y ambig uous in stating that one of the two claims will be paid from the interpleaded funds “ depe nding
up on how th e interpleader is u ltimately resolved .” B ut the confirmed plan
and the court ’ s findings and conclusions clarify that no distrib ution will be18 made on either claim until all disputes have been resolved, including the Tenth Circuit appeal s

. V OL als o a r gues t hat the bankruptcy court should have considered
the merits of the claim objections. First, it contends that the bankruptcy

c o ur t erred in not disallowing MCG ’ s claim because MCG is not a c redi t or , i .e ., MCG has no right to enforce the Judgmen t. An d second, VOL contends that the bankruptcy court erred in not allowing VOL ’ s claim because
MC G ’ s objection w as not b rought pursuant to § 502(b). We have addressed
VOL ’ s first argument in th e standi ng discussion

. As noted, with the

vaca tur of the Disa l lowan ce Order a nd the O bjection Order, wh ich VOL
does not contest, the question of who has the right to enforce the J udgm ent is an open quest ion

. VOL ’ s second argument also l acks merit. MCG ’ s li mited ob jection did not seek to disallow the claim altogether but t o redirec t payment t o itself b ased on the engagement agreement. Again, whether that is appro priate re mains an open q uestion.
I n its rep ly brief, VOL complains that bo t h appellees raised new
argume nts on appeal. But thos e arguments relate to the merits of the claim objections , so we have not relied on them in deci ding whether th e bankruptcy court correctly abstained

. C O N C L US ION
T he b ank r upt c y c ourt did not abus e its discretion in abstaining from deciding the dispute betwe en VOL and MCG. W e th ere fo re AF FIR M

.