FI L ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T May 15, 2009 THOMAS K. KAH

N CL ERK [PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

No. 0 7- 15 89 7 D. C. Dock etNo. 0 6- 61 41 0- CV-CM A BKCY No. 0 5- 22 07 4 B KC-J KO InRe: DENIS CHIRA, Deb to r.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ ELIZABETH CHIRA, Pl ai nt iff -Ap pe ll an t, ve rs us JOSÉ SAAL, SONYA L. SAL KIN, Defen da nt s- App el le es .
No. 0 8- 10 40 0 D.C. Dock etNo. 0 7- 60 04 9- CV-CM A BKCY No . 05 -2 20 74 -BKC- JKO InRe: DENIS CHIRA,

f.d.b .a. Cred itCo un se li ng Co rp ., f.d.b .a. Eagl e Nes t o f Hol lywood , Inc ., etc., Deb to r.__

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ ELIZABETH CHIRA, Pl ai nt iff -Ap pe ll an t, ve rs us SONYA L. SAL KIN, Defen da nt -Ap pe ll ee.

__ __ __ __ __ __ __ __ __ __ __ __ App eal s fr om

th e Uni te d S ta te s Di st ric t Co urt fo r th e So uthe rnDis tri ctof F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ _ (Ma y 15 , 20 09 ) Befo re DUBINA, BLACK an d F AY, Circ ui t J ud ge s. DUBINA, Cir cu itJu dg e: Den is an d El iz ab eth C hi ra ac qu ire d t he Sh el do n B each Hot el in 19 78 an d op erat edth e h ot el to ge th er fo r ov er 2 0 years. In 19 99 , th e co up le de ci de d t o p art way s, an d fo r th e p as t 1 0 years, Den is an d El iz ab eth h av e b een lo ck edin bi tt erl y co nt es te d l it ig at io n o ve r co nt ro l o f th e h ot el in bo th st at e an d fe de ral co urt. The Ch ira s’ st at e co urt d iv or ce p ro ceed in g re su lt edin th e fo rm at io n o f a co ntractfor pu rch as e o f th e h ot el be twee n adi vo rce c ou rt- ap po in te d re cei ve r an d J os é Saa l. Befo re t hi s p ur ch as e co nt ractwas e xe cu te d, t he Ch ira s fo un d t he m se lv es in fed eral

2co urt b y

way of De ni s’s Ch ap te r 7 b an krup tc y cas e. The b an krup tc y

co urt ap pr ov eda se tt le m en t ag reem en t b etween Jo sé Saal an d t he Trus te e o f Den is ’s ba nk rupt cy

est at e, whi ch cal ls forth e p erfo rm an ce o f th e Saa l p ur ch as e co nt ract , an d t he di st ric t co urt af

firm edth e b an krup tc y

co urt’s o rd er. Fo r th e rea so ns th at fo ll ow, we af

firm th e d is tri ctco urt’s jud gm en t af firm in g the ba nk rupt cy

co urt’s ap pr ov al of t he sal e o f th e h ot el to Jo sé Saal
. I. BACKGROUND A. Divo rc e Co ur t Pr oc eed in gs In19 99 , Eliz ab eth fi le d fo r di vo rce f ro m Deni s i n t he cir cu itco urt o f Bro wardCo un ty, Fl or id a, an d the di vo rce p ro ceed in gs co nt in ue d fo r se ve ral y ears . As a re su ltof o ng oi ng di sp ut es be twee n Den is an d El iz ab eth o ve r th e o pe rat io n o f th e h ot el , Eliz ab eth re qu es te d the ap po in tm en t o f a rec ei ve r to run th e h ot el . The di vo rce c ou rt g ran te d t hi s re qu es t. Co nc lu di ng th atth e Ch ira s wer e in cap ab le of
ru nn in g t he ho te l t og ethe r, th e d iv or ce co urt en te redanord er es tabl is hi ng pr oc edur es forth e sa le of t he ho te l, an d El iz ab eth i m m ed ia te ly app eal ed . W

hi le th e ap pe al was p en di ng , pu rs ua ntto th e d iv or ce co urt’s o rd er, the rece iv er en te red in to a co nt ractforth e sa le of t he ho te l wi th Jo sé Saal . The d iv or ce co urt ap pr ov ed th e rec ei ve r’s pu rch as e co nt ractwit h S aal , bu t s ta y edth e eff ect iv en es s o f th e sa le pe nd in g t he di sp os it io n o f Eli zab eth’s ap pe al of t he di vo rce c ou rt’s e arl ie r sa le 3pr oc edur es ord er. Eli zab eth d idno t ap pe al th e o rd er ap pr ov in g t he sal e o f th e

ho te l t o S aal . Flo rid a’s Fo urth Dis tri ctCo urt o f App eal subs eque nt ly affirm edth e sa le pro cedur es ord er, trig ge rin g t he effec ti ve ne ss of t he di vo rce c ou rt’s o rd er ap pr ov in g t he sal e o f th e h ot el . The d iv or ce co urt the n g ran te d t he joi ntreque stof Den is an d El iz ab eth t o d is ch arg e th e rec ei ve r. Desp it e d is ch arg in g t he rece iv er, th e d iv or ce co urt d en ie d El iz ab eth’s s ub se qu en t m ot io n t o s etasi de th e p ur ch as e co nt ractbe twee n S aal an d t he rece iv er. B. Ban kr up tc

y Co ur t Pr oc eed in gs Befo re t he Saal pu rch as e co nt ractwas p erfo rm ed , Deni s’s cr ed it or s fi le d a n in vo lu nt ary pe ti ti onforba nk rupt cy see ki ng rel ie f un de r Ch ap te r 7 o f th e Ban kr up tc y Co de . The b an krup tc y

co urt en te redanord er fo r rel ie f an d app oi nt ed So nya L. Salk inas Tru st ee o f Den is ’s est at e. The Tru st ee an d S aal en te redin to a se tt le m en t ag reem en t en ti tl ed“ Agr eem en t fo r Ass um pt io n o f Jo sé Saal Co nt ract W it h M od ifi cat io ns an d fo r Set tl em en t o f Dis pu te s.” Un de r th e te rm s o f th e se tt le m en t ag reem en t, Sa al ag reedto pa y $2 ,00 0,0 00 to th e Tru st ee as co ns id erat io n fo r th e Tru st ee’s ag reem en t t o a ss um e th e Saa l p ur ch as e co nt ract
an d t o c omm en ce an d d il ig en tl y pro se cu te anad ve rs ary pr oc eed in g t o c le ar t it le to th e h ot el . Purs ua ntto he r ob li ga ti on s u nd er t he set tl em en t ag reem en t, t he Trus te e m ad e a m ot io n t o a ss um e th e Saa l p ur ch as e co nt ractun de r 11 U.S.C. § 3 65 . In i ts 4or de r ap pr ov in g t he ass um pt io n o f th e p ur ch as e co nt ract , th e b an krup tc y co urt fo cu se d o n t hr ee i ss ue s: whethe r as su m pt io n o f th e p ur ch as e co nt ractwas i n t he be stin te res ts of t he est at e, whe th er t he di vo rce c ou rt i nt en de d t he pu rch as e co nt ractto bi ndth e Ch ira s d es pi te th e d is m is sa l o f th e rec ei ve r, an d wh ethe r th e Trus te e p ro pe rly m ov edfora ret ro act iv e ex te ns io n o f th e d ead li ne to ass um e ex ecu to ry co nt ract s. Se e In re C

hi ra , 34 3 B .R. 36 1, 3 71 (Ban kr . S.D. Fla. 2 00 6)
. The bank rupt cy

co urt d idno t i nd ep en de nt ly eval ua te th e se tt le m en t ag reem en t be twee n S aal an d t he Trus te e u nd er t he tes t fo r th e ap pr ov al of aset tl em en t ag reem en t i n b an kr

up tc y an no un cedby thi s co urt i n In re J us ti ce Oa ks II, Ltd. , 89 8 F .2d15 44 (11 th Cir . 19 90 ) (“ Ju st ic e Oak

s ”). Eli zab eth app eal edth e b an krup tc y co urt’s o rd er ap pr ov in g t he set tl em en t ag reem en t an d a ss um

pt io n o f th e Saa l p ur ch as e co ntractto th e So ut he rnDis tri ctof Fl or id a, arg ui ng th atth e b an krup tc y co urt i m pr op erl y ap pr ov edth e as su m

pt io n o f th e p re-b an krup tc y

pu rch as e co nt ractun de r § 3 65 be cau se th e se tt le m en t ag reem en t b etween Saal an d the Trus te e subs tant ia ll y m od ifi edth e o rig in al pu rch as e co nt ract . Accor di ng to Eli zab eth, t hi s m od ifi cat io n t rig ge redhe r ri gh ts as co -o wne r of

th e h ot el un de r 11 U.S.C. § 3 63 . Eliz ab eth d idno t ap pe al th e ba nk rupt cy

co urt’s co nc lu si on th atth e d iv or ce co urt i nt en de d t he Saal pu rch as e

5co nt ractto bi ndth e Ch ira s o r th e b an krup tc y co urt’s co nc lu si on th atth e Tru st ee pr op erl y m ov edfor

a ret ro act iv e ex te ns io n o f th e d ead li ne forass um pt io n. Alt ho ug h t he di stric t co urt af firm edth e b an krup tc y

co urt’s o rd er ap pr ov in g th e se tt le m en t ag reem en t, t he di st ric t co urt d idno t co nduc t an an al y si s o f th e se tt le m en t ag reem en t u nd er Ju st ic e Oak s. In st ead , th e d is tri ctco urt fo cu se d al m os t ex cl us iv el y

on th e b an krup tc y

co urt’s ap pr ov al of t he ass um pt io n o f th e Saal pu rch as e co nt ractun de r § 3 65 . After r ev ie win g t he tex t o f § 3 65 an d c as e la w fro m ot he r ci rcu it s, t he di st ric t co urt co nc lu de d tha t § 36 5 m ay be us edto as su m e ex ecu to ry

co nt ract s t ha t h av e b een m od ifi edaft er t he fil in g o f a p et it io n fo r rel ie f in ba nk rupt cy . On th e b as is of t hi s co nc lu si on , th e d is tri ctco urt de te rm in edth at“ [t]he Ban krup tc y Co urt was no t re qu ire d t o app ly sect io n 3 63 in th e sa le of t he Hot el an d d idno t err whe n i t p erm it te d t he sal e u nd er s ect io n 3 65 .” Ch ir a v . Sa al (

In re C hi ra ), 36 7 B .R. 88 8, 9 00 (S.D. Fla . 20 07 ). Eli zab eth app eal s th e d is tri ctco urt’s d eci si on . Whi le th e p ro ceed in gs co nc ern in g t he ap pr ov al of t he set tl em en t ag reem en t
an d a ss um

pt io n o f th e p ur ch as e co nt ractwere p en di ng , th e Tru st ee b ro ug htan ad ve rs ary pr oc eed in g i n t he ba nk rupt cy co urt ag ai ns t El iz ab eth a ndot he r cre di to rs of Deni s’s es ta te to “ de te rm in e th e v al id it y , pri or it y , andam ou ntof tho se de ed s m ad e an d o bl ig at io ns in curredby [Deni s]” an d “ to ob ta in de te rm in at io ns of m an y 6co ll at eral is su es in vo lv in g m ortg ag ees , li en ho ld ers , co- own ers , andanin si de r

le ss ee, t ha t af

fectth e Tru st ee’s ab il it y

to li qu id at e th e es ta te .” Sa lkin v. Ch ir a ( In
re Ch ir a ), 35 3 B .R. 69 3, 6 99 (Ban kr . S.D. Fla. 2 00 6)
. Afte r ho ld in g alen gt hy tria l re su lt in g i n e xt en si ve fin di ng s o f fac t, t he ba nk rupt cy

co urt co nc lu de d t ha t El iz ab eth h aden ga ge d i n ape rv as iv e p atte rnof
un de rh an de d a ndm an ip ul at iv e co nduc t, i nc lu di ng th e v io la ti on of v ari ou s d iv or ce co urt o rd ers an d v ol un ta ry set tl em en t ag reem en ts , in aneffo rt t o h arm Deni s fin an ci al ly andto de la y

th e sa le of t he ho te l. Onth e b as is of t he se fin di ng s, t he ba nk rupt cy

co urt en te reda fi na l ju dg m en t equi tabl y subo rd in at in g El iz ab eth’s cl ai m s t o tho se of a ll th e o th er cr ed it or s o f th e es ta te . The b an krup tc y co urt al so co nc lu de d t ha t El iz ab eth i s n oten ti tl edto an y po rti on of t he $2 ,00 0,0 00 paym en t of fere d b y Saal to th e Tru st ee u nd er t he set tl em en t ag reem en t. The di st ric t co urt affi rm edth e b an krup tc y

co urt’s fi na l ju dg m en t i n t he ad ve rs ary pr oc eed in g. Se e Ch ir a v . Sa lkin (

In re C hi ra ), 37 8 B .R. 69 8, 7 17 (S.D. Fla . 20 07 ). Eli zab eth ap pe al s t he di st ric t co urt’s jud gm en t af firm in g t he ba nk rupt cy

co urt’s fi nd in g t ha t Eli zab eth i s n oten ti tl edto an y po rti on of t he $2 ,00 0,0 00 pa ym en t u nd er t he
se tt le m en t ag reem en t. II. STANDARDS OF REVIEW

7W e rev ie w a ba nk rupt cy co urt’s fi nd in gs of f

actforcle ar erro r. IBT In t’l , In c. v. No rthe rn (

In re I nt ’l Ad min . Ser vs ., Inc
. ), 40 8 F .3d68 9, 6 98 (11 th Cir
. 20 05 ). W e rev ie w de no vo co nc lu si on s o f la w, whet he r m ad e b y th e b an kr

up tc y co urt o r th e d is tri ctco urt. Id
. W e rev ie w th e b an krup tc y co urt’s ap pr ov al of a
se tt le m en t ag reem en t u nd er an ab us e o f di sc ret io n s ta nd ard
. Ch rist o v . Pad ge tt , 22 3 F .3d13 24 , 13 35 (11 th Cir . 20 00 ). III. ANALYSIS A. App ro va l o

f the Se tt le men t Agre emen t a nd Ass ump ti on of

th e S aa l Pu rc ha se Co nt ra ct Eli zab eth fi rs t co nt en ds th atth e d is tri ctco urt erredinaffi rm in g t he ba nk rupt cy

co urt’s co nc lu si on th atth e Saa l p ur ch as e co nt ractm ay be ass um ed
un de r 11 U.S.C. § 3 65 . Eliz ab eth a rg ue s t ha t the set tl em en t ag reem en t b etween Saal an d t he Trus te e subs tant ia ll y m od ifi es th e p re-b an kr

up tc y pu rch as e co nt ract , tri gg eri ng he r ri gh ts un de r 11 U.S.C. § 3 63 as ano n- de bt orco -o wne r of th e h ot el
. Thu s, as anin it ia l m at te r, we m us t d et erm in e whe th er t he set tl em en t ag reem en t co ns ti tu te s a m od ifi cat io n o f th e p re-b an krup tc y pu rch as e co nt ractbe twee n S aal
an d t he st at e d iv or ce co urt re cei ve r. Eli zab eth a rg ue s tha t t he set tl em en t ag reem en t’s re fere nc es to

“ m od ifi cat io ns ” co m

pe l t he co nc lu si on th atth e se tt le m en t ag reem en t m od ifi es th e

8Saal pu rch as e co nt ract . Saal an d t he Trus te e co nt es t thi s ch arac te riz at io n, ar gu in g

th atth ey di d n otin te ndforth e se tt le m en t ag reem en t t o m od ify the pre -b an krup tc y pu rch as e co nt ractan d t ha t t he term “ m od ifi cat io ns ” m erel y

refe rs to ne w ob li ga ti on s u nd ert ak en by Saal an d t he Trus te e to effe ctua te th e p ur ch as e co nt ract , in it s o rig in al form , inth e co nt ex t o f Den is ’s ban krup tc y .

“ Pri nc ip le s g ov ern in g g en eral co ntractlaw ap pl y to in te rp retset tl em en t ag reem en ts .” Resn ic k v. Ucce ll o Immo bi li en GMBH, Inc. , 22 7 F .3d13 47 , 13 50 (1 1t h C ir. 2 00 0) . The “ ‘int erp ret at io n o f pr iv at e co ntract s i s o rd in ari ly a qu es ti on of st at e law.’ ” Ch em. Ban k v. Fir st Tru st of N.Y
. ( In re Se. Ban ki ng

Co rp . ), 15 6 F.3 d 1 11 4, 1 12 1 (1 1t h C ir. 1 99 8) (qu ot in g Mas tr ob uo no v. Sh ea rs on Leh man Hut to n, In c. , 51 4 U.S. 5 2, 6 0 n .4, 1 15 S. Ct. 1 21 2, 1 21 7 n .4, 1 31 L. Ed. 2d76 (1 99 5) ); se e a ls o Res ni ck , 22 7 F .3dat 1 35 0 n .4 (“ Bec au se th is set tl em en t ag reem en t i s b etween two pri va te pa rti es , fed eral co m m on law d oe s n otap pl y .”); Hay es v. Na t’l

Se rv . Indus . , 19 6 F .3d12 52 , 12 53 (11 th Cir . 19 99 ) (ap pl y in g s ta te la w to co ns tru ct io n a nden fo rceabi li ty of se tt le m en t ag reem en t ar is in g u nd er Tit le VII). “ [T]he subs ta nt iv e la w of the for um st at e g ov ern s i ss ue s o f st at e la w th at ari se inba nk rupt cy

pro ceed in gs .” Men ch is e v. Akerman Se nt er fi tt , 53 2 F .3d11 46 , 11 50 (11 th Cir . 20 08 (ci ti ng Co lw el l v. Ro ya l In t'l Tra di ng Co rp . ( In re Colwel l),

919 6 F .3d12 25 , 12 26 (11 th Cir .19 99 )). The refo re, we ap pl y th e law of Fl or id a, th e fo ru m st at e, to de te rm in e th e m ean in g o f th e se tt le m en t ag reem en t. 1 Und er Fl or id a la w, “ [t]he ba si c ru le of c on tra ctin te rp ret at io n i s t ha t the in te nt io n o f th e p art ie s i s t o b e d et erm in edfro m a co ns id erat io n o f th e who le ag reem en t.” Ca lder on v. J.B. Nur se ri es , Inc
. , 93 3 S o. 2 d 5 53 , 55 6 (F la . Dis t. Ct
. App . 20 06 ); se e a ls o Gr ims le y v. In ver ra ry Reso rt

Hot el , Ltd
. , 74 8 S o. 2 d 2 99 , 30 1 (Fl a. Dis t. Ct . App . 19 99 ); Dor so n v . Dor

so n , 39 3 S o. 2 d 6 32 , 63 3 (F la . Dis t. Ct
. App . 19 81 ). Co ns id eri ng th e se tt le m en t ag reem en t as a who le , we con cl ud e th at Saal an d t he Trus te e in te nd edfor th e ag reem en t t o s et tl e th ei r di sp ut e o ve r th e va li di ty of th e p re-b an krup tc y pu rch as e co nt ractbe twee n S aal an d t he di vo rce co urt re cei ve r an d t o a idin th e ad m in is tra ti on of t he ba nk rupt cy est at e. W e d o n ot readth e se tt le m en t ag reem en t t o m od ify the term s o f th e p re-b an krup tc y co nt ract be twee n S aal an d t he di vo rce c ou rt r ecei ve r fo r th e p ur ch as e o f th e h ot el
. Hav in g d et erm in edth atth e se tt le m en t ag reem en t d oe s n otm od ify the Saal pu rch as e co nt ract , we ne xtm us t d eci de whet he r th e d is tri ctco urt co rrec tl y 2

The pa rties have not raised a

conflict-of

-laws issue a

nd have not disputed that F lorida 1 law g overns the inter

pretation of the settlement agree ment. Be cause we hold that the se ttlement agree ment does not constitute a modified e x ecutor y 2 contra ct, we ne ed not addr ess the district cour t’s conclusion that modified executory contra cts may be assumed unde r 11 U.S.C. § 365. 10co nc lu de d t ha t the ba nk rupt cy co urt d idno t ab us e it s d is cret io n b y ap pr ov in g t he
se tt le m en t ag reem en t. As b ot h t he ba nk rupt cy

co urt an d t he di stric t co urt n ot ed , when m ak in g t he de ci si on to ass um e o r rejectth e Saa l p ur ch as e co nt ract , th e Tru st ee fa cedth e pr os pe ctof apo te nt ia ll y

m as si ve cla im

ag ai ns t the est at e fo r reject io n d am ag es . 3 A go odde al of u nc ert ai nty su rro un de d S aal ’s po te nt ia l cl ai m be cau se th e cl ai m hi ng edon th e le ga l ef

fectof t he di sc ha rg e o f th e d iv or ce co urt re cei ve r on th e en fo rceabi li ty of th e Saa l p ur ch as e co nt ract , an i ss ue on whi ch ne it he r th e ba nk rupt cy

co urt n orth e p art ie s co ul d l oc at e a s in gl e Fl or id a cas e. Rat he r th an li ti ga te th ei r di sp ut e o ve r th is arca ne an d u nc ert ai n l eg al is su e, Saal an d t he 4 Trus te e d eci de d t o e xe cu te a se tt le m en t ag reem en t. Ban krup tc y

Ru le 90 19 (a) p ro vi de s t ha t “ [o ]n m ot io n b y th e trus te e an d a fte r no ti ce an d ahe ari ng , th e co urt m ay ap pr ov e a co m

pr om is e o r se tt le m en t.” In th is ci rcu it , a ba nk rupt cy

co urt ev al ua ti ng a pr op os edset tl em en t m us t co ns id er:

Both the ba

nkruptcy court a nd the district court c oncluded that Saa l’s claim for da mag es 3 would be at lea st as larg e as the differ ence betwee n the price rec eived in a ma rket sale and the purcha se price under the orig inal Saal contra ct. In addition, both the bankruptcy court a nd the district court opined that Saa l may have be en able to establish substantial consequential damag es. To dec ide this issue, the bankruptcy court c onsulted W

igton v. Climax Coal Co. , 270 Pa. 4 420, 113 A. 425 (Pa. 1921), a nd Madorsky

v. Suburban Home

s Co. , 45 Ohio App. 83, 186 N.E. 371 (Ohio Ct. App. 1933). 11(a) Th e p ro babi li ty of su cces s i n t he li ti ga ti on ; (b ) th e d iff ic ul ti es , if an y , to be en co un te redinth e m at te r of co ll ect io n; (c) t he co m

pl ex it y of t he li ti ga ti on in vo lv ed , andth e ex pe ns e, in co nv en ie nc e an d d el ay ne ces sa ril y at te nd in g i t; (d) th e p aram ou ntin te res t o f th e cre di to rs an d apro pe r de fere nc e to th ei r rea so nabl e v ie ws i n t he pre m is es . In re J us ti ce Oa ks II, Ltd. , 89 8 F .2d15 44 , 15 49 (11 th Cir . 19 90 ) (quo ti ng Mar ti n v. Ka ne ( In re A & C Pro

p. ), 78 4 F .2d13 77 , 13 81 (9t h C ir. 1 98 6) ). Cou rts 5
co ns id er t he se fact or s t o d et erm in e “ th e fai rn es s, re as on ab le ne ss an d a de qu acy of a pr op os edset tl em en t ag reem en t.” In re A & C Pro p. , 78 4 F .2dat 1 38 1. Alt ho ug h t he ba nkrupt cy co urt d idno t ex pl ic it ly con si de r al l fo urof t he Ju st ic e Oak

s fact or s i n i ts ord er ap pr ov in g t he set tl em en t ag reem en t, we co nc lu de

Ba nkruptcy courts in other jurisdictions have sug g ested that “ [w] hen the a ssumption or 5 reje ction of an e x ecutor

y contra ct or lea se is one of the terms of a settlement or compr omise . . . the prope r test to be applied to the e ntire transa ction is that for appr oval of a proposed settlement.” In re M

irant Cor p. , 348 B.R. 725, 743 (B ankr. N .D. Tex. 2006) (citing In re Pinnacle Brands, Inc
. , 259 B.R. 46, 54 (B ankr. D . Del. 2001))
. The settlement a g ree ment betwee n Saal and the T rustee, which contains the a ssumption of an unmodified executory contra ct as one of its terms, must meet the test for the a pproval of a

proposed se ttlement agree ment. We need not indepe ndently deter mine whether

the assumption of the pre -bankr uptcy Saal purc hase c ontrac t meets the nar row business judg ment standard a pplicable to the assumption of an executory contra ct. See I

n re Gardinier, Inc
. , 831 F.2d 974, 976 n.2 ( 11th Cir. 1987) (“ [S ]i nce c ourts revie w a trustee ’s dec ision to assume or reje ct a c ontrac t under a traditional ‘business judg ment’ standar d, the scope of re view in this area is narrow .”). H oweve r, when a settlement agree ment contains the a ssumption of a pre- bankruptc y contra ct as one of its terms, the contr act at issue must be ex ecutor y in nature a

nd meet the other

basic re quirements set forth in § 365. The district c ourt corr ectly conclude d that these ba sic requir ements have been met in the instant case. 12th atth e b an krup tc y co urt d idno t ab us e it s d is cret io n b y ap pr ov in g the set tl em en t ag reem en t. The ba nk rupt cy

co urt i m pl ic it ly con si de redth e fi rs t Ju st ic e Oak s fact or —t he pro babi li ty of su cces s i n t he po te nt ia l l it ig at io n o ve r Saa l’s cl ai m for reject io n d am ag es —wh enitde te rm in edth atth e Saa l p ur ch as e co nt ractsu rv iv ed th e d iv or ce co urt’s d is ch arg e o f th e rec ei ve r. Fur th erm or e, th e b an krup tc y co urt co nc lu de d t ha t Sa al ha d acred ib le cla im forbo th reject io n a ndco ns eque nt ia l da m ag es th atco ul d s ig ni fic an tl y di m in is h the reco ve ry

of t he un se cu redcred it or s of Deni s’s es ta te . The b an krup tc y co urt i m pl ic it ly con cl ud edth atSaal ha d a st ro ng pro babi li ty of su cces s i n t he po te nt ia l l it ig at io n o ve r hi s cl ai m forreject io n da m ag es . W e ag ree wi th th e b an krup tc y co urt’s ev al ua ti on of S aal ’s pro babi li ty of
su cces s, an d we c on cl ud e th atth e fi rs t Ju st ic e Oak s fact orsupp orts th e b an krup tc y co urt’s d eci si on to ap pr ov e th e se tt le m en t ag reem en t. The ba nk rupt cy

co urt d idno t co ns id er t he sec on d a ndth ird Ju st ic e Oak s fact or s— co ll ect io n d iff

ic ul ti es forth e Tru st ee an d t he co m pl ex it y , exp en se , in co nv en ie nc e, an d d el ay of t he po te nt ia l l it ig at io n o ve r Saa l’s cl ai m forreject io n da m ag es —i n any m ean in gf ul way . The s eco ndfact or is irr el ev an t i n t he in st an t cas e b ecau se co ll ect io n d iff ic ul ti es forth e Tru st ee ar e n otanis su e. W it h re ga rdto th e th irdfact or , we con cl ud e th atSaal an d t he Trus te e fac edth e p os si bi li ty of 13co st ly andpro tra ct edli ti ga ti on ov er Sa al ’s cla im forreject io n d am ag es , whi ch
supp orts th e b an krup tc y

co urt’s d eci si on to ap pr ov e th e se tt le m en t ag reem en t. The ba nk rupt cy

co urt ex pl ic it ly eval ua te d the fou rth Ju st ic e Oak s fact or —t he pa ram ou ntin te res ts of t he cred it or s. Be cau se th e se tt le m en t ag reem en t p ro vi de s fo r pa ym en t i n fu ll of a ll th e cl ai m s o f al l t he cred it or s, we co nc lu de th atth e b an krup tc y co urt co rrec tl y

fou ndth atap pr ov al of t he set tl em en t ag reem en t i s i n the be stin te res ts of t he cred it or s. Bec au se all th ree r el ev an t Ju st ic e Oak s fact or s s up po rt t he ba nk rupt cy co urt’s d eci si on to ap pr ov e th e se tt le m en t ag reem en t, we ag ree wi th th e d is tri ct co urt’s fi nd in g t ha t t he ba nkrupt cy co urt d idno t ab us e it s d is cret io n i n app ro vi ng th e se tt le m en t ag reem en t b etweenSaal an d t he Trus te e. B. Th e $ 2,0 00,00 0 Pa

ymen t Un de r the Se tt le men t Agre emen t Eli zab eth n ex t co nt en ds th atth e d is tri ctco urt erredin affi rm in g t he ba nk rupt cy

co urt’s co nc lu si on th atsh e is no t en ti tl edto an y po rti on of t he $2 ,00 0,0 00 off

eredby Saal t o t he Trus te e as co ns id erat io n fo r th e se tt le m en t ag reem en t. Eli zab eth arg ue s t ha t t he ba nk rupt cy co urt ab us edit s d is cret io n b y ex erci si ng it s eq ui tabl e au th or it y un de r 11 U.S.C. § 1 05 in co nt rav en ti on of the
ex pr es s p ro vi si on s o f 11 U.S.C. § 3 63 . This arg um en t i s wi th ou t m eri t.

14The ba nk rupt cy co urt b as edit s co nc lu si on th atEli zab eth i s n oten ti tl edto
an y po rti onof t he $2 ,00 0,0 00 pa ym en t o n b ot h l eg al an d e qu it ab le gro un ds , sa y in g: I co nc lu de , andequi ty dic ta te s, t ha t El iz ab eth n otrece iv e h al f of th e $2 ,00 0,0 00 pre m iu m

off eredby Saal t o t he est at e in ex ch an ge forth e co urt’s ap pr ov al of t he ass um pt io n o f th e Saa l co nt ract . By it s o wn t erm s, th e ad de ndum

to th e co nt ractbe twee n t he Trus te e an d S aal sp eci fic al ly pr ov id es th atall of t he ex trafun ds wou ldbe pa idto th e es ta te . . . . Sin ce I ha ve pre vi ou sl y

rul edth atth e Saa l co ntract to whi ch El iz ab et h a gr eed in th e p ri or di vo rc e co ur t l

it ig at io n rem ai ns a va li d a nden fo rceabl e ex ecu to ry co nt ract , Eliz ab eth wo ul d h av e b eenbo un d b y th e $ 5.8 5 m il li on sal e p ric e bu t fo r th e fi li ng of t he in vo lu nt ary ba nk rupt cy pe ti ti on ag ai ns t Den is , whi ch ga ve ris e to th e p os si bi li ty tha t t he co nt ractco ul d b e reject edun de r 11 U.S.C. § 3 65 . The fi li ng of t he ba nk rupt cy pe ti ti on crea te d awho le ho st of ad di ti on al leg al is su es so th atitwas wel l wo rth Saal ’s whi le to off er an ad di ti on al in du cem en t t o t he Trus te e, an in du cem en t wh ic h S aal ne ve r wou ldha ve ha d t o o fferif t hi s b an krup tc y cas e were n otpe nd in g. Si m pl y st at ed , Eliz ab eth wo ul d h av e rec ei ve d n o m or e th an on e-h al f of $5 ,85 0,0 00 fo r he r own ers hi p i nt eres t i f th e Saa l s al e h adgo ne forwardas m an da te d b y 15th e d iv or ce co urt. Tha t i s p reci se ly wha t s he wil l g etforhe r ha lf i nt eres t i n

th e [h ot el ] if t he Saal sal e cl os es . . . . Mo reo ve r, Eli zab eth h as do ne no th in g to jus ti fy anen ha nc em en t o f he r po si ti on . To th e co ntrary, her co nduc t . . . refl ect s a c on si st en t an d re le nt le ss effo rt t o d ep riv e Den is of h is rem ai ni ng equi ty in the [ho te l] by an y an d a ll m ean s p os si bl e, in cl ud in g m an y whi ch
no co urt o f equi ty cou ldco un te na nc e. In re C hi ra , 35 3 B .R. at 7 28 –2 9 (f oo tn ot e o m it te d)
. Eli zab eth’s ar gu m en t i gn or es th e fac t t ha t t he di st ric t co urt ru le d t ha t s he ha s n o l eg al en ti tl em en t t o p aym en t u nd er t he set tl em en t ag reem en t. Eli zab eth
was leg al ly bou ndby the Saal pu rch as e co nt ractpri orto th e fi li ng of t he ba nk rupt cy

pe ti ti on , andsh e wil l n otrece iv e an yth in g l es s upo n t he sal e o f th e ho te l u nd er t he term s o f th e se tt le m en t ag reem en t t ha n s he wou ldha ve rece iv ed
ou ts id e o f ba nkrupt cy . The b an krup tc y co urt’s d is cu ss io n o f Eli zab eth’s in equi tabl e co nduc t d oe s n otde tra ctfro m th e fo rce o f it s l eg al co nc lu si on s. We ag ree wi th th e d is tri ctco urt’s fi nd in g t ha t t he ba nkrupt cy co urt d idno t ab us e it s di sc ret io n b y

rul in g t ha t El iz ab eth i s n oten ti tl edto an y po rti on of t he $2 ,00 0,0 00 pa ym en t u nd er t he set tl em en t ag reem en t. IV. CONCLUSION

16Fo r th e fo reg oi ng reas on s, we af firm th e d is tri ctco urt’s jud gm en t af firm in g th e b an krup tc y

co urt’s o rd er ap pr ov in g t he sal e o f th e h ot el to Saal an d i ts fin di ng th atEli zab eth i s n oten ti tl edto an y po rti onof t he $2 ,00 0,0 00 off eredby Saal t o th e Tru st ee u nd er t he set tl em en t ag reem en t. AFFIR MED.

17