By order of the Bankruptcy Appellate Panel, the precedential effect

of this decision is limited to the case and parties pursuant to 6th

Cir. BAP LBR 8013-1(b). See also 6th Cir. BAP LBR 8010-1(c).

File Name: 13b0001n.06

BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: DANIEL PEOPLES, JR.,

Debtor.

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No. 12-8017

Appeal from the United States Bankruptcy Court

for the Southern District of Ohio

Case No. 11-30146.

Decided and Filed: January 4, 2013

Before: EMERSON, HARRIS, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.

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COUNSEL

ON BRIEF: Thomas R. Noland, Michael R. Keefe, STATMAN, HARRIS & EYRICH, LLC,

Dayton, Ohio, for Appellee. Daniel Peoples, Jr., Dayton, Ohio, pro se.

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OPINION

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ARTHUR I. HARRIS, Bankruptcy Appellate Panel Judge. This appeal arises from an order

entered by the Bankruptcy Court for the Southern District of Ohio approving the Chapter 7 trustee’s

motion to settle and compromise the debtor’s employment discrimination claims. 
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I. ISSUES ON APPEAL

The issue presented by this appeal is whether the bankruptcy court erred when it approved

the Chapter 7 trustee’s proposed settlement of the debtor’s employment discrimination claims. For

the reasons that follow, the order of the bankruptcy court is AFFIRMED.

II. JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal.

The United States District Court for the Southern District of Ohio has authorized appeals to the

Panel, and neither party timely elected to have this appeal heard by the district court. 28 U.S.C.

§§ 158(b)(6), (c)(1). A final order of a bankruptcy court may be appealed as of right pursuant to

28 U.S.C. § 158(a)(1). On April 14, 2012, the bankruptcy court entered an order approving the

trustee’s motion to settle and compromise claims. A bankruptcy court’s order approving a trustee’s

motion to settle and compromise claims is a final, appealable order. Johnson v. Jackson Family

Television Inc. (In re Media Cent., Inc.), 190 B.R. 316, 321 (E.D. Tenn. 1994). The debtor timely

filed a notice of appeal on April 23, 2012.

“The bankruptcy court’s approval of a settlement agreement is reviewed for an abuse of

discretion.” In re MQVP, Inc., 10-2225, 2012 WL 1233019, at *2 (6th Cir. Apr. 13, 2012)

(unpublished) (citing Lyndon Prop. Ins. Co. v. E. Ky. Univ., 200 F. App’x 409, 413 (6th Cir. 2006)).

Under an abuse of discretion standard of review, “[t]he question is not how the reviewing court

would have ruled, but rather whether a reasonable person could agree with the bankruptcy court’s

decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.”

Mayor of Baltimore v. W. Va. (In re Eagle–Picher Indus., Inc.), 285 F.3d 522, 529 (6th Cir. 2002)

(citations omitted).

III. FACTS

From April 2007 until his termination in late February 2010, Daniel Peoples, Jr. (“Debtor”)

worked as an employee for Veolia Water North America Operating Service, Inc. and Veolia Water

America, LLC (collectively, “Veolia”). In early-December 2010, Debtor retained counsel to pursue
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employment discrimination claims against Veolia and filed a charge with the Equal Employment

Opportunity Commission (the “EEOC”).

On January 13, 2011, fifteen days after signing an amended EEOC charge, Debtor filed a

petition for relief under Chapter 7 of the Bankruptcy Code. Debtor failed to disclose his potential

claims against Veolia in his bankruptcy schedules, Statement of Financial Affairs, and at his § 341

meeting of creditors. On March 17, 2011–three days after the meeting of creditors–Debtor filed suit

against Veolia. In his suit, Debtor alleged racial discrimination and prayed for relief in excess of

$25,000 dollars. Two weeks after filing suit, Debtor received his “right to sue” letter from the EEOC

and amended his Complaint to include Title VII claims. Veolia removed Debtor’s case to federal

district court. 

Debtor never notified the Chapter 7 trustee (“Trustee”) of his discrimination claims, and the

bankruptcy court entered an order discharging Debtor on June 2, 2011. Trustee eventually learned

of Debtor’s claims in late July 2011, and at Trustee’s request, the bankruptcy court reopened the

Debtor’s bankruptcy case. On September 13, 2011, Veolia moved for summary judgment on

Debtor’s employment discrimination claims in the district court based upon judicial estoppel because

Debtor failed to disclose the claims in proceedings before the bankruptcy court. Subsequently,

Trustee assumed responsibility for prosecution of Debtor’s claims. Trustee unsuccessfully attempted

to retain an employment attorney who would pursue Debtor’s discrimination claims on a contingency

basis, and Debtor’s estate lacked the resources to hire an attorney. Trustee negotiated with Veolia

to settle Debtor’s discrimination claims and obtained an $8,000 settlement offer. On

December 21, 2011, Trustee filed a motion to settle and compromise Debtor’s employment

discrimination claims in the bankruptcy court. Debtor objected to Trustee’s proposed settlement.

On April 12, 2012, the bankruptcy court held a hearing on Trustee’s motion to settle and Debtor’s

objection. The bankruptcy court issued an oral decision approving Trustee’s motion to settle and

entered a written order reflecting its judgment. Debtor timely filed his Notice of Appeal.

In his two-page Brief, Debtor argues that the bankruptcy court erred because of an alleged

conflict of interest which prohibited Trustee from settling the discrimination claims, Trustee’s
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motion should have been stayed pending the outcome of a different case involving judicial estoppel,

and because Trustee failed to obtain a large enough settlement.

IV. DISCUSSION

“On motion by the trustee and after notice and a hearing, the court may approve a

compromise or settlement.” Fed. R. Bankr. P. 9019. “When determining whether to approve a

proposed settlement . . . ‘the bankruptcy court is charged with an affirmative obligation to apprise

itself of the underlying facts and to make an independent judgment as to whether the compromise

is fair and equitable.’ ” In re MQVP, Inc., 2012 WL 1233019, at *3 (citing Reynolds v. C.I.R.,

861 F.2d 469, 473 (6th Cir. 1988)).

The Supreme Court hasset forth the general factorsto be considered by the bankruptcy judge

in determining whether a proposed settlement is fair and equitable: 

There can be no informed and independent judgment as to whether a

proposed compromise isfair and equitable until the bankruptcy judge

has apprised himself of all facts necessary for an intelligent and

objective opinion of the probabilities of ultimate success should the

claim be litigated. Further, the judge should form an educated

estimate of the complexity, expense, and likely duration of such

litigation, the possible difficulties of collecting on any judgment

which might be obtained, and all other factors relevant to a full and

fair assessment of the wisdom of the proposed compromise. Basic to

this process in every instance, of course, is the need to compare the

terms of the compromise with the likely rewards of litigation.

Id. (quoting Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson,

390 U.S. 414, 424–25, 88 S. Ct. 1157 (1968)). 

When considering a trustee’s motion to compromise bankruptcy courts should consider four

factors:

(a) The probability of success in the litigation; (b) the difficulties, if any, to be

encountered in the matter of collection; (c) the complexity of the litigation involved,

and the expense, inconvenience and delay necessarily attending it; (d) the paramount

interest of the creditors and a proper deference to their reasonable views in the

premises. 
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In re Bard, 49 F. App’x 528, 530 (6th Cir. 2002) (quoting Drexel v. Loomis, 35 F.2d 800, 806

(8th Cir. 1929)). See also In re MQVP, Inc., 2012 WL 1233019, at *3; Lyndon Prop. Ins. Co. v.

Katz, 196 F. App’x 383, 387 (6th Cir. 2006). “Though Bard is an unpublished opinion, . . . [the

Sixth Circuit continues] to apply its four-factor test when considering challenges to proposed

settlement agreements in bankruptcy cases.” See In re MQVP, Inc., 2012 WL 1233019, at *3 (citing

Sixth Circuit case law). 

In this case, the bankruptcycourt correctlyrecognized and applied the standard for approving

a bankruptcy trustee’s motion to settle. Even though Debtor’s claims alleged serious discrimination,

Trustee could not find competent counsel willing to represent the estate, making it almost certain that

Debtor’s claims would result in zero recovery. Additionally, Veolia’s pending summary judgment

motion in the district court raised undecided issues of law which Trustee believed would require

briefing, and Debtor’s estate did not have any funds to adequately respond to that motion. As a

result, Trustee negotiated his best settlement and moved to settle. No creditor objected to Trustee’s

proposed settlement.

The principal reason for Trustee’s inability to hire employment counsel appears to be that

Veolia, Debtor’s former employer, raised the issue of judicial estoppel in the district court. “The

doctrine of judicial estoppel ‘generally prevents a party from prevailing in one phase of a case on an

argument and then relying on a contradictory argument to prevail in another phase.’ ” White v.

Wyndham Vacation Ownership, Inc., 617 F.3d 472, 476 (6th Cir. 2010) (quoting New Hampshire v.

Maine, 532 U.S. 742, 749, 121 S. Ct. 1808, 1814 (2001)). In White, a factually similar case, the

Sixth Circuit found a debtor’s prior representations to the bankruptcy court estopped her from

litigating her employment discrimination claims in the district court. See White, 617 F.3d at 484.

At the time the bankruptcy court entered judgment granting Trustee’s motion to settle it was unclear

whether judicial estoppel applies to a bankruptcy trustee if the trustee prosecutes a debtor’s

employment discrimination claims. See Harrah v. DSW Inc., 852 F. Supp. 2d 900, 907

(N.D. Ohio 2012). After the bankruptcy court entered judgment, the Sixth Circuit held that judicial

estoppel based on the debtor’s representations to the bankruptcy court should not apply to a

bankruptcy trustee. Stephenson v. Malloy, 700 F.3d 265 (6th Cir. 2012) (debtor’s failure to disclose
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claims does not prevent the bankruptcy trustee from pursuing them as the real party in interest). See

Auday v. Wet Seal Retail, Inc., 698 F.3d 902, 905 (6th Cir. 2012) (citing Reed v. City of Arlington,

650 F.3d 571, 573-74 (5th Cir. 2011) (en banc) (innocent bankruptcy trustee should not be estopped,

in line with rulings in the Seventh, Tenth, and Eleventh Circuits)). Given the unsettled case law at

the time of its decision and the lack of experienced counsel willing to litigate the employment

discrimination claims, we are unable to say that the bankruptcy court abused its discretion when it

approved Trustee’s motion to settle, despite subsequent developments in Sixth Circuit case law.

In his brief, Debtor also argues that Trustee made a mistake at the meeting of creditors which

raised the judicial estoppel issue, and the case should have been stayed pending the outcome of an

unrelated case involving the same legal issues. Debtor raises these issues for the first time on appeal.

The Sixth Circuit has held that, in general, issues not presented to the trial court but raised for the

first time on appeal are not properly before the appellate court. McFarland v. Henderson,

307 F.3d 402, 407 (6th Cir. 2002); see also Bailey v. Floyd Cnty. Bd. of Educ., 106 F.3d 135, 143

(6th Cir. 1997) (“It is well-settled that this court will not consider arguments raised for the first time

on appeal unless our failure to consider the issue will result in a plain miscarriage of justice.”).

There is no reason in this case to depart from this well-settled policy. 

V. CONCLUSION

For the foregoing reasons, the order of the bankruptcy court is AFFIRMED.