UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: AZALEA GARDENS BOARD &

CARE, INCORPORATED, d/b/a

Brookside of Winston-Salem,

Debtor.

AZALEA GARDENS BOARD & CARE,

No. 99-1012

INCORPORATED, d/b/a Brookside of

Winston-Salem,

Debtor-Appellant,

v.

WRH MORTGAGE, INCORPORATED,

Creditor-Appellee.

Appeal from the United States District Court

for the Middle District of North Carolina, at Durham.

N. Carlton Tilley, Jr., Chief District Judge.

(CA-98-473-1, BK-97-50365C-11W)

Argued: April 5, 2000

Decided: May 31, 2000

Before NIEMEYER, Circuit Judge,

HAMILTON, Senior Circuit Judge, and

Roger J. MINER, Senior Circuit Judge of the

United States Court of Appeals for the

Second Circuit, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: David Farrer Meschan, TUGGLE, DUGGINS & MESCHAN, P.A., Greensboro, North Carolina, for Appellant. John

Arlington Northen, NORTHEN BLUE, L.L.P., Chapel Hill, North

Carolina, for Appellee. ON BRIEF: Robert C. Cone, Robert W.

Franklin, TUGGLE, DUGGINS & MESCHAN, P.A., Greensboro,

North Carolina, for Appellant.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Azalea Gardens Board & Care, Inc. appeals the order of the district

court affirming the bankruptcy court's finding that Azalea was in

default of its amended plan of reorganization under Chapter 11 of the

Bankruptcy Code and of a related settlement agreement and authorizing the mortgage holder on Azalea's rest home to foreclose. Azalea

contends that the bankruptcy court was without subject matter jurisdiction to enter its order and that, in any event, Azalea's defaults were

de minimis and therefore insufficient to justify foreclosure. For the

reasons that follow, we affirm.

I

Azalea filed a voluntary petition for Chapter 11 relief in the bankruptcy court, its estate consisting almost entirely of a rest home on

which the Department of Housing and Urban Development held a

$3.6 million mortgage. After the mortgage was sold to WRH Mortgage, Inc. ("WRH"), Azalea and WRH negotiated a settlement agreement for ongoing operation of the rest home and payment of the

mortgage. They also agreed to an amended plan of reorganization,

which the bankruptcy court confirmed in November 1997. Following

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confirmation, Azalea leased its rest home to Faiger M. Blackwell to

have him operate it. That lease extended through February 1998.

After Azalea made its first three $20,000 mortgage payments to

WRH, its performance under the amended plan and settlement agreement deteriorated. Even though Azalea mailed the February payment

on February 9, 1998, the payment was not received until after the

February 10 due date. In addition, Azalea failed to submit to WRH

required financial reports for at least three months, and it failed to pay

all of the property taxes, leaving a deficit of $500. Azalea also

allowed insurance on the rest home to lapse due to nonpayment of

premiums. Finally, Azalea failed to submit to its counsel in escrow a

deed in lieu of foreclosure by November 5, 1997, which the parties

had agreed upon in order to secure Azalea's performance under the

amended plan and settlement agreement. WRH sent Azalea a letter on

January 28, 1998, advising it of certain of these defaults and noting

in addition that Azalea's lease of the rest home to Blackwell may also

have violated the amended plan.

After receiving WRH's letter, Azalea filed a motion with the bankruptcy court, invoking the bankruptcy court's "inherent continuing

responsibility to assure that the [amended plan] is properly implemented" and seeking a determination that it was in compliance with

the amended plan and settlement agreement. The bankruptcy court not

only denied Azalea's motion but found that Azalea had breached the

amended plan and settlement agreement and was in default. Specifically, the court found that Azalea had not timely made its February

payment to WRH; it had failed to maintain insurance on the rest

home; it had failed to file monthly reports; it had failed to pay the

property taxes in full; and it had failed to deliver a deed in lieu of

foreclosure to counsel by the November deadline. The bankruptcy

court authorized WRH to proceed with foreclosure and receive the

escrow documents from Azalea's counsel. It also enjoined Azalea not

to interfere with Blackwell's continuing operation of the rest home.

The court later denied Azalea's motion for reconsideration after it had

"independently investigated" Azalea's concerns, but it did rescind its

order requiring Blackwell's continuing operation of the rest home and

transferred operation back to Azalea.

On appeal, the district court rejected Azalea's challenge to the

bankruptcy court's subject matter jurisdiction and affirmed the find-

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ing that Azalea had breached both the amended plan and the settlement agreement. Accordingly, it authorized WRH to foreclose on the

rest home. This appeal followed.

II

Azalea first contends that the bankruptcy court did not have subject

matter jurisdiction to find it in default of the amended plan and settlement agreement because the court considered these matters after it

had confirmed the amended plan and after Azalea had filed a statement with the bankruptcy court stating that the amended plan had

been substantially consummated. Azalea maintains this jurisdictional

challenge even though Azalea itself invoked the bankruptcy court's

jurisdiction to determine its compliance with the amended plan.

Without considering this inherent inconsistency in Azalea's position, we reject its challenge to the bankruptcy court's jurisdiction. The

Bankruptcy Code authorizes a court, after confirmation, to "direct the

debtor" to "perform any other act . . . that is necessary for the consummation of the plan." 11 U.S.C. § 1142(b); see also Goodman v. Phillip

R. Curtis Enterprises, Inc., 809 F.2d 228, 232 (4th Cir. 1987) (holding

that § 1142 "limits the authority of the[bankruptcy court] to matters

concerning the implementation or execution of a confirmed plan"). It

is clear that the bankruptcy court, in reviewing Azalea's compliance

with the amended plan and settlement agreement, had authority to

direct actions necessary for the full "consummation" of a plan.

In addition, 28 U.S.C. § 1334(b) extends jurisdiction to bankruptcy

courts in all proceedings "arising in or related to cases under title 11

[the Bankruptcy Code]." Under this provision, it is necessary "only to

determine whether a matter is at least `related to' the bankruptcy." In

re Wood, 825 F.2d 90, 93 (5th Cir. 1987). And an action is "related

to" bankruptcy if "the outcome could alter the debtor's rights, liabilities, options or freedom of action (either positively or negatively) and

which in any way impacts upon the handling and administration of

the bankrupt estate." A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994,

1002 n.11 (4th Cir. 1986) (quotation marks and citation omitted).

Indeed, it is "difficult to imagine any instance in which a bankruptcy

court would not have jurisdiction if the debtor were a party." Id. (quotation marks and citation omitted).

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We believe that under either 11 U.S.C. § 1142(b) or 28 U.S.C.

§ 1334(b), the bankruptcy court had jurisdiction to determine whether

Azalea was complying with the amended plan and settlement agreement and that the district court did not err in affirming the bankruptcy

court's jurisdiction.

III

On the merits, Azalea argues that the obligations of the settlement

agreement were inoperative because the bankruptcy court never mentioned the agreement in approving the amended plan. This argument

overlooks the fact that the amended plan specifically stated that it

would incorporate the settlement agreement as part of the court's

order confirming the amended plan. Indeed, in its motion for determination of compliance with the amended plan, Azalea acknowledged

that "the agreed upon Plan treatment accorded to the claim of [WRH]

. . . incorporates the settlement agreement."

As to whether Azalea's conduct amounted to default, Azalea does

not dispute the supporting facts. It concedes that it did not deliver the

deed in lieu of foreclosure to its counsel by November 5, 1997; it does

not dispute that it failed to provide monthly financial reports; it makes

no assertion that it paid all the property taxes; and it acknowledges

that insurance lapsed on the rest home. It argues, rather, that some of

these tasks were ministerial and were left to Blackwell to perform.

While that may be a legitimate claim for Azalea to make against

Blackwell, it does not discharge Azalea's responsibility under the

amended plan and settlement agreement. See Barker v. Agee, 378

S.E.2d 566, 570 (N.C. Ct. App. 1989), rev'd in part on other grounds,

389 S.E.2d 803 (N.C. 1990).

Azalea also argues that several of its defaults were de minimis, particularly the late mailing of its $20,000 February payment. If this payment, which was late only by a day or two, were the only act of

default, Azalea's contention might merit some consideration. However, in view of the numerous defaults, some of which significantly

altered the mortgage holder's risks, we find Azalea's arguments without merit. We certainly cannot conclude that the bankruptcy court's

factual findings were clearly erroneous.

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Finally, Azalea argues that the bankruptcy court wrongly enjoined

it from interfering in Blackwell's continued operation of the rest

home and that, in determining whether to retain Blackwell, the court

engaged in improper ex parte communications. As it turned out, however, following district court intervention, the bankruptcy court stayed

that part of its order authorizing Blackwell to manage the rest home

and ordered that the sole possession and management of the rest home

be transferred back to Azalea. Therefore, Azalea has suffered no

adverse effect from the initial order of the bankruptcy court, which is

now moot. See Leonard v. Hammond, 804 F.2d 838, 842 (4th Cir.

1986).

Accordingly, we affirm the judgment of the district court.

AFFIRMED

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