[ DO NOT PUBLISH] 

## In the 

# United States Court of Appeals For the Eleventh Circuit

____________________
No. 21

- 12295

____________________

In re : MICHAEL WILLIAM KENNY,
Debtor.

___________________________________________________

MICHAEL WILLIAM KENNY,
Plaintiff

- Appellant,

versus CRITICAL INTERVENTION SERVICES, INC.,

Defendant

- Appellee. USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 1 of 162 Opinion of the Court 21

- 12295

____________________ Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:20

- cv

- 02458

- KKM

____________________ Before W ILLIAM P RYOR , Chief Judge, R OSENBAUM , and B RASHER , Circuit Judges.

B RASHER , Circuit Judge:This is an appeal from a settlement approval order in a Chapter 7 bankruptcy proceeding. When Michael Kenny was hired by Critical Intervention Services, Inc. (“CIS”) , as a security guard, he signed several restrictive covenants with the firm, including a n on

compete agreement. After less than a month on the job, Kenny resigned and joined another private security firm called Securitas. W hen CIS notified Securitas of the non

- compete agreement it had with Kenny , Securitas terminated him . At that point, Kenny c hallenged CIS ’s enforcement of the non

- compete agreement in state
court

. CIS countersued for breach of contract

. While that litigation was ongoing, Kenny filed a Chapter 7 bankruptcy petition.

A trustee administered Kenny’s estate in bankruptcy court. Se veral of Kenny’s creditors, including CIS, filed claim s on his estate . The Trustee eventually proposed a settlement in which CIS paid $30,000 into Kenny’s estate in exchange for dismissing the

state

- court action. That money would then be used to pa y Kenny’s USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 2 of 1621

- 12295 Opinion of the Court 3

other unsecured creditors in full

. Any leftover funds would be divided between Kenny and CIS . The bankruptcy cour t approved the settlement over Kenny’s objection . Kenny filed a motion for reconsideration, which the bankruptcy court denied. He then appealedto the United States District Court for the Middle District of Florida, wh ich affirmed the approval of the settl ement . He then filed asecondary appeal with this Court. Reviewing for abuse of discretion, we affirm.
I. BACKGROUND CIS hired Kenny as a security guard under a non

- compet e agreement. Kenny was initially assigned to work the night shift, but after losing chil dcare for his daughter, he asked CIS if he could

move t o the day shift. CIS could not accommodate his request, so he resigned. Kenny’s time at CIS lasted less than one month. Most of Kenny’s time at CIS was spent in state licensure courses, orientation, and job

- training. Three days were spent working field

- training shifts.

A fter leaving CIS, Kenny began working for Securitas, a CIS competitor, as a security guard. CIS considered Kenny’s employment with Securitas a violat ion of his non

- compet e agreement, which prohibited Kenny from working for a CIS competitor for two years after his employment with CIS ended

. After learning about Kenny’s new position, CIS notified Securitas that Kenny was in breach of the non

- compet e agreement . Securitas then terminated Kenny. USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 3 of 164 Opinion of the Court 21

- 12295
Kenny sue d CIS in Florida state court seeking (1) a declaratory judgment that the non

- compete he signed with CIS was unenforceable, and (2) money damages based on tortious interference leading to his termination by Securitas. Because the harm caused by his termination was offset by unemployment benefits he received, Kenny’s economic damages were capped at $10,000 in lost wages

. He also sought non

- economic damages for emotional distress and punitive damages. CIS counterclaimed for breach of contract , seeking liquidated damages and injunctive relief based on the

non

- compet e agreement . CIS later moved to disqualify Kenny’s counsel.
Before the state court could rule on that motion
, and as part of his strategy , Kenny filed a petition for Chapter 7 bankruptcy. Kenny ’s petition listed $333,898 in total liabilities , mostly in the form of non

- priority , unsecured claims. His only meaningful asset s

w ere his claim s against CIS. Kenny listed CIS as a nonpriority
, unsecured cre ditor with a contingent and disputed claim stemming from the state

- court litigation

. CIS filed a proof of claim for $302,305.26 based on “ [a] ttorney’s fees and costs incurred ” in the

state

- court litigation with Kenny. Kenny filed an object ion to the proof of claim . According to Kenny, CIS’s proof of claim was meritless because CIS could not prevail in the state

- court action against Kenny. While Kenny’s objection was pending, the bankruptcy Trustee negotiated a settlement agreement with CIS. Un der the settlement , CIS agreed to pay Kenny’s estate $30,000 in exchange for USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 4 of 1621

- 12295 Opinion of the Court 5 dismissing the state

- court action with prejudice. CIS would receive an allowed claim for $302,305.26

— though it was to be subordinated to all other unsecured claims. And CIS would assign thirty

three percent of any funds it received for its claim (up to $10,000) to Kenny. The upshot is that all of Kenny’s unsecured debts would be paid, and Kenny would receive a discharge of his debts and up to $10,000 cash.
The Trustee asked the ban kruptcy court to approve the settlement under 11 U.S.C. § 105(a) and Federal Rule of Bankruptcy Procedure 9019(a). No creditor objected to the proposal , but Kenny objected, arguing that settlement was not in his best interests

. Specifically, Kenny argued that the settlement undervalued his claims in the state

- court action where he was seeking non

- economic and punitive damages. He also argued that CIS was not a legitimate creditor and had no legal basis for recovery against Kenny or the estate.
The b ankruptcy court held a hearing on the proposed settlement. T he court analyzed the proposed settlement under the test laid out by Wallis v. Justice Oaks II, Ltd. ( In re Justice Oaks II, Ltd. ) , 898 F.2d 1544 (11th Cir. 1990) , concluding that “each of the [fo ur] Justice Oaks factors weigh [ed] in favor of approving the compromise

. ” First, i t found that Kenny’s probability of succe ss on the merits of his state

- court claim s was doubtful . Though Kenny raised several arguments against enforcing the non

- compete agre ement, he overlooked the fact that CIS had successfully enforced similar agreements twice in the six years leading up to the settlement. And USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 5 of 166 Opinion of the Court 21

- 12295

e ven if Kenny prevailed, his economic damages against CIS were capped at $10,000

— significantly less than what the s ettlement promised to pa y into his estate

— and his entitlement to non

- economic damages was uncertain

. Second, potential difficulties in collection meant that even if he won on the merits and obtained non

economic damages, there could be delay in collecting from CIS

. Third, the state

- court litigation was complex given the nature of the claim s , the pending motion to disqualify Kenny’s counsel, and the difficulty of retaining replacement counsel if the m otion were granted

. Indeed, Kenny’s counsel argued that he was uniquely qualified to handle the non

- compete litigation and could not be replaced if the state court disqualified him

. Finally, the interest of Kenny’s creditors weighed heavily in favor of the settlement, under which all non

- CIS creditors expected to be paid in full.The bankruptcy court then approved the settlement. In doing so it concluded that Kenny’s initial objection to CIS’s proof of claim was “subsumed in the settlement” and therefore ov erruled. Kenny filed a motion for reconsideration, which the bankruptcy court denied.Kenny then appealed to the U.S. District Court for the Middle District of Florida. He argued that because he was likely to succeed on the merits of his state

- law claims, the bankruptcy courtshould have recognized that CIS’s claim was meritless and removed CIS as a creditor. And he argued that the bankruptcy court erred in denying his motion for reconsideration because, again, it underestimated the strength of his state

- l aw claims, which biased USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 6 of 1621

- 12295 Opinion of the Court 7 its weighing of the Justice Oaks factors. After reviewing the recordand holding its own hearing, the district court affirmed the bankruptcy court ’s approval order. It h eld that the bankruptcy court did not abuse its discretion by ( 1) approving the Trustee’s settlement with CIS, (2) overruling Kenny’s objection to CIS’s proof of claim, and (3) denying Kenny’s motion for reconsideration. Kenny then filed a secondary appeal with this Court.
II. STANDARD S OF REVIEW When reviewing a district court’s appellate review of a bankruptcy court’s decision, we appl y the same standards of review as the district court. See R eynolds v. Servisfirst Bank ( In re Stanford ) , 17 F. 4th 116, 121 (1 1th Cir. 2021) (citing U nited Mine Workers of Am. Combined Benefit Fund v. Toffel ( In re Walter Energy, Inc. ) , 911 F.3d 1121, 1135 (1 1th Cir. 2018)). Accordingly, we review conclusions of law drawn by both the district court and the bankruptcy

court de novo . And we review factual findings for clear error. See id. A factual finding is clearly erroneous if the reviewing court examines the evidence and is “left with the definite and firm conviction that a mistake has been made.” Id. (quoting F eshbach v. Dep ’ t of Treasury ( In re Feshb ach ) , 974 F.3d 1320, 1328 (1 1th Cir. 2020)).
We review a bankruptcy court’s order approv ing a settlement for abuse of discretion. See Chira v. Saal ( In re Chira ) , 567 F.3d 1307, 1311 (11th Cir. 2009) (citing Christo v. Padgett ( In re Christo ) , 223 F.3d 1324, 1335 (11th Cir. 2000))

. Under this standard,

we “ must affirm unless we find that the lower court has made a USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 7 of 168 Opinion of the Court 21

- 12295 clear error of judgment, or has applied the wrong legal standard.” In re Walker , 532 F.3d 1304, 1308 (11th Cir. 2008) (per curiam) (cleaned up ). Finally, we review a bankruptcy court’s denial of a motion for reconsideration for abuse of discretion. See Fed. R. Bankr. P. 9024 (incorporating Fed. R. Civ. P. 60(b) ); Big Top Koolers, Inc. v. Circus

–

Man Snacks, Inc. , 528 F.3d 839, 842 (11th Cir.
2008 ) (holding that we “review the district court’s denial of a Rule 60(b) motion for an abuse of discretio n”).
III. DISCUSSION

A. The Bankruptcy Court Did Not Abuse its Discretion in Approving the Trustee’s Settlement Proposal The main issue on appeal is whether the bankruptcy court abused its discretion by approving the proposed settlement. Under Federal Rule of Bankruptcy Procedure 9019, a bankruptcy court may approve a settlement of controversies “[o]n motion by the

trustee a nd after notice and a hearing.” Fed. R. Bankr. P. 9019(a). We have recognized a strong public policy in favor of settlements. Fl a. Trailer & Equip. Co. v. Deal , 284 F.2d 567, 571 (5th Cir. 1960). Nonetheless, b efore approv ing a settlement, a bankruptcy court must determine that the settlement does not “fall below the lowest point in the range of reasonableness.” M artin v. Pahiakos ( In re Martin ) , 490 F.3d 1272, 1275 (11th Cir. 2007). The bankruptcy court here considered four factors in evaluating the reasonableness of the proposed settlement : “(a) [t]he probability of success in the litigation; (b) the difficulties, if any, to USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 8 of 1621

- 12295 Opinion of the Court 9 be encountered in the matter of collection; (c) the complexity of the litigation involved, and the ex pense, 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 Justice Oaks II, Ltd. , 898 F.2d at 1549 (quoting Martin v. Kane ( In re A & C Props

. ) , 784 F.2d 1377, 1381 (9th Cir. 1986))

. T he bankruptcy court found that all four Justice Oaks factors favored approving the settlement.
First, the bankruptcy court found that Kenny’s probability of success in state court favored settlement. T o enforce i ts non

compete agreement, CIS must show that the agreement is justified by a “ legitimate business interest. ” See Fla

. Stat

. § 542.335 (b)

. Section 542.335 (b) provides a non

- exhaustive list of such interest s, including protection of confidential information, substantial customer relationships, or an extraordinary investment in the employee’s education or training. Id. Beyond what is enumerated in the statute, a legitimate business interest is “ a business asset that, if misappropriated, would give its new owner an unfair competitive advantage over its former owner. ” White v. Mederi Caretenders Visiting Servs. of Se. Fla., LLC , 226 So. 3d 774 , 784

– 85 (Fla. 2017) ( quoting John A. Grant, Jr. & Thomas T. Steele, Restrictive Covenants: Florida Returns to the Original “Unfair Competition” Approach for the 21st Century , 70 Fla. B.J. 53, 54 (Nov. 1996)).Kenny argues that he is likely to succeed in state court because CIS’s non

- compete agreement is unenforceable. He contends that CIS lacks a legitimate busin ess interest in enforcing the USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 9 of 1610 Opinion of the Court 21

- 12295 agreement against a security guard who earned slightly more than minimum wage , worked at CIS for less than a month
, and spent most of his time with CIS in licensure courses, training , and orientation . He also contends that CIS lacks an interest in keeping its training materials confidential because a significant amount of CIS training material is publicly available either in print or online. Furthermore, i f Kenny is correct that CIS cannot tie its non

- compete agreement to a legitimate business interest, then it cannot prevail in its counter

- claim against Kenny

— the sole basis for CIS’s claim on Kenny’s estate

. Though it acknowledged that Kenny raise d “a number of arguments that call into question the enforceability of the non

- compete , ” the bankruptcy court identified several considerations that cast doubt on Kenny’s likelihood of success in the litigation

. First, the bankruptcy court considered CIS’s successful enforcement of

two similar non

- competes against past employees in state court. Kenny contends that CIS’s past success in enforcing its non

- compete agreements came via consent orders and that the merits of those disputes were not fully litigated. The bankruptcy court acknowledged that fact, but still found it noteworthy that state

courts had enforced CIS’s non

- compete agreements at least twice. Second, the bankruptcy court considered that even if Kenny prevailed in state court, his economic damages were capped at $10,000

— significantly less than what hi s estate received under the settlement. Third, though CIS’s claim on the estate totaled more than $300,000, that figure was immaterial because (1) CIS’s claim USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 10 of 1621

- 12295 Opinion of the Court 11

was subordinated to the claims of all other creditors and (2) CIS funded the settlement by paying $30,000 into the estate to satisfy Kenny’s debts, splitting any remainder with up to $10,000 going to Kenny. Finally, the bankruptcy court noted Kenny’s inability to support , with relevant authority
, his argument that he was entitled

to additional non

- eco nomic damages. Second, the bankruptcy court found that the difficult ies in collection favored settlement

. Kenny argues that there are no known difficulties with collecting a judgment from CIS . He contends that collecting a ny judgment always involves some amount of delay, and that the efficiency gained by settl ing his claims does not outweigh the potential benefit s of allowing him to litigate. T he bankruptcy court considered that even if Kenny prevailed and recovered non

- economic damages from CIS, collecting them would necessarily take longer than the quick payout to creditors under the settlement. It reasonably concluded that an immediate payout toKenny’s estate and a discharge of his debts outweighed the possibility of collecting a larger judgmen t sometime in the future.
T hird
, the bankruptcy court found that the complexity of the litigation favored settlement. Kenny argues that discovery in the state

- court litigation was nearly complete and that the case was ready for trial. And he contends that the pending motion to disqualify his counsel should be disregarded as a “delay tactic.” T he bankruptcy court considered that non

- compete litigation is “highly specialized .” I t reason ed that i f the Trustee declined to settle
, he would need to defend agains t the motion to disqualify Kenny’s counsel. USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 11 of 1612 Opinion of the Court 21

- 12295

And i t relied on Kenny’s own statement that his current counsel was the only lawyer who could adequately represent him
, concluding that finding replacement counsel would be difficult if the motion to disqualify were granted. Finally, the bankruptcy court considered the interests of Kenny’s creditors. N o creditor objected to the proposed settlemen t, and t he $30,000 in settlement proceeds was expect ed to be enough to cover administrative expenses an d to pay every unsecured creditor other than CIS in full

. We cannot say t he bankruptcy court abuse d its discretion in concluding that the Justice Oaks factors favor settlement. The proposed settlement paid Kenny more than he could have recovered in econo mic damages from the litigation , which were capped at $10,000

. And it paid in full each unsecured creditor other than CIS. Rather than guarantee his creditors a quick payout, Kenny asks for

an opportunity to fully litigate his state

- court claims in search of

non

- economic damages. The bankruptcy court reasonably reject ed that request

. Kenny complains that the bankruptcy court, in weighing the factors, did not itself fully adjudicate the merits of his state

- lawclaims. But it was not required to. In evaluating a settlement proposal, a bankruptcy court need not find facts, draw legal conclusions, or otherwise adjudicate the merits of underlying litigation. See In re Justice Oaks II, Ltd. , 898 F.2d at 1549. The nature of a settlement is that no court rules on the merits of the settled claims. Because the trustee’s proposed settlement was well above the USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 12 of 1621

- 12295 Opinion of the Court 13 “lowest point in the range of reasonableness,” the bankruptcy court did not abuse its discretion in approving i t. See In re Martin , 490 F.3d at 1275.

B. The Bankruptcy Court Did Not Abuse its Discretion inAllowing CIS’s Claim Kenny argues that the bankruptcy court erred in overruling his objection to CIS’s proof of claim. He contends that
, if the court had ruled on h is objection before approving the settlement, it would have concluded that CIS’s state

- court claim lacked merit
, disqualifying CIS as a creditor and altering the Justice Oaks analysis in his favor

. He contends that if the bankruptcy court had ruled separat ely on his objection to CIS’s claim, that would have rendered him “the prevailing party on his claim for declaratory judgment [in state court] . . . and entitle him (and the Estate) to significant fees.”
This argument fails. First, nothing requires a bank ruptcy
court to rule on a proof of claim or an objection to a proof of claim before the claim can be settled. See G a. Dep ’t of Revenue v. Mouzon Enters., Inc. ( In re Mouzon Enter s

. , Inc. ) , 610 F.3d 1329, 1334(11th Cir. 2010). Such a rule would defeat the purpose of settlement. Second, the bankruptcy court analyzed and overruled Kenny’s objection in the process of approving the settlement. The bankruptcy court explained that Kenny’s object ion to CIS’s proof of claim was “subsumed ” in to its settlement analysis. Because the bankruptcy court did not abuse its discretion in approving the USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 13 of 1614 Opinion of the Court 21

- 12295settlement, it did not abuse its discretion in overruling Kenny’s objection under that settlement.
C. The Bankr uptcy Court Did Not Abuse its Discretion in Denying Kenny’s Motion for Reconsideration Kenny filed a motion for reconsideration of the bankruptcycourt’s order approving the settlement and overruling his objection to the proof of claim. The bankruptcy cour t denied Kenny’s motion for reconsideration , and the district court affirmed. On appeal, Kenny argues that the bankruptcy court abused its discretion because it relied on two prior instances of CIS successfully enforcing its restrictive covenants against p ast employees in court. Kenny contends that the orders resolving these cases were stipulated and say nothing about the merits of his own claims against CIS. This argument fails. Kenny sought reconsideration under Fed. R. Bankr . P. 9024, which borrows standards from Fed. R. Civ. P. 60. Specifically, Kenny sought reconsideration under Rule 60(b)(3), which authorizes relief in the case of fraud , misrepresentation, or misconduct by an opposing party. Fed. R. Civ. P. 60(b)(3). To obtain relief under this provision, a movant must prove by clear and convincing evidence that the opposing party obtained the order through fraud, misrepresentations, or other misconduct. See Waddell v. Hendry C

n

ty. Sheriff’s O ff. , 329 F.3d 1300, 1309 (11th Cir. 2003). As evidence of misconduct, Kenny cites the bankruptcy court’s reliance on two prior state

- court orders enforcing non

USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 14 of 1621

- 12295 Opinion of the Court 15

compet e agreements between CIS and its former employees. In his motion for reconsideration, Ken ny argued that CIS “misrepresented the nature” of the orders “to mislead the [c]ourt” as to Kenny’s probability of success in state court

. Kenny appears to abandon that argument on appeal, never mentioning any misrepresentation by CIS. In any event, he fal ls far short of establishing by “clear and convincing evidence” any misconduct by CIS or the Trustee. In fact, CIS provided the bankruptcy court with copies ofthe orders so that the bankruptcy court could make its own determination of their relevance. Acc ordingly, the bankruptcy court did not abuse its discretion in denying reconsideration under Rule 60(b)(3). Alternatively, Kenny sought reconsideration under Rule 60(b)(6), which allows reconsideration of an order for “other reasons justifying relief .” Fed . R. Civ. P. 60(b)(6). B ut Rule 60(b)(6) is an “extraordinary remedy which may be invoked only upon a showing of exceptional circumstances” including “unexpected hardship.” Griff i n v. Swim

- Tech Corp. , 722 F.2d 677, 680 (11th Cir. 1984) (quotation omitted)

. Kenny ’s only argument that he is entitled to relief under this provision is

— again

— that the bankruptcy court should have adjudicated the merits of his state

- court claim s and ruled that CIS’s non

- compet e agreement was unenforceable. As we explained above , the bankruptcy court need not make a merits determination before approving a settlement

. Kenny also fails to show that his case features “exceptional circumstances” that justify relief under Rule 60(b)(6 ). Far from it

— despite Kenny’s uncertainty USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 15 of 1616 Opinion of the Court 21

- 12295

of success in state court , the approved settlement awards Kenny a

sum greater t han the amount of economic damages he could recover if he succeeded in state court

. IV. CONCLUSION

For the reasons stated above, we affi rm the district court’s decision affirming the bankruptcy court’s order approving the Trustee’s proposed settlement and overruling Kenny’s objection to CIS’s proof of claim.
AFFIRMED. USCA11 Case: 21-12295 Date Filed: 06/23/2022 Page: 16 of 16