Opinion ID: 197801
Heading Depth: 2
Heading Rank: 3

Heading: Other Settlement Terms

Text: 33 Next, Hicks Muse contests a settlement modification which deferred any determination regarding the enforceability of certain causes of action against nonsettling defendants, including Hicks Muse, which the Bank Group assigned to the Trustee. Hicks Muse contends that the bankruptcy court had no choice but to strike this modification because it lacked the power to approve the assignment. See Caplin v. Marine Midland Grace Trust Co. of N.Y., 406 U.S. 416, 434, 92 S.Ct. 1678, 1688, 32 L.Ed.2d 195 (1972) (holding that trustee lacked standing to sue in behalf of individual creditors of estate); Williams v. California 1st Bank, 859 F.2d 664, 666-67 (9th Cir.1988) (applying Caplin ban even though creditor purportedly assigned its claim to trustee). 34 We need not address the Caplin question on which the Hicks Muse contention is predicated. Unlike a settlement agreement wherein the estate abandons an enforceable right, the assignment by the Bank Group conferred a benefit upon the chapter 7 estate. As the bankruptcy court acted well within its discretion in determining that the benefit conferred by the settlement served the best interests of the chapter 7 estate without regard to whether the Trustee realized additional benefit from the subject assignment, nothing more was required. 9
35 Finally, Hicks Muse faults the bankruptcy court finding that the Trustee and the Bank Group negotiated the settlement in good faith. It characterizes the finding as immaterial to the Rule 9019(a) best interests of the estate standard and worries that the Bank Group may misuse the finding should Hicks Muse later seek contribution, since state law normally bars nonsettling defendants from asserting claims for contribution against codefendants who have settled with the plaintiff in good faith. See, e.g., Mass. Gen. Laws Ann. ch. 231B, § 4 (Contribution Among Tortfeasors Act). 36 The district court attempted to accommodate the Hicks Muse concern by amending the settlement order so as to reserve the question whether the bankruptcy court's good faith finding would be entitled to preclusive effect in any subsequent state-law contribution action. Although we concur in the district court's action, we think Hicks Muse was entitled to a determination that the interpretation feared by Hicks Muse is precluded by the settlement order. 37 The best interests standard under Bankruptcy Rule 9019 contemplates a determination by the bankruptcy court as to whether the proposed settlement was negotiated in good faith. See, e.g., In re Kuhns, 101 B.R. 243, 246-47 (Bankr.D.Mont.1989) (disapproving bad faith settlement). Although the good faith finding by the bankruptcy court below was expressed in general terms, without mentioning contribution, elsewhere the court explicitly provided that the legal effect of the settlement order on contribution claims was to be governed by [n]onbankruptcy law. 38 Moreover, there is considerable question whether the bankruptcy court possessed the power to make a good faith finding preempting future contribution claims by nonsettling parties in these circumstances. Compare, e.g., Feld v. Zale Corp. (In re Zale Corp.), 62 F.3d 746, 752-54 (5th Cir.1995) (holding that bankruptcy court approving settlement lacked jurisdiction to resolve claims between nondebtors), with Munford v. Munford, Inc. (In re Munford, Inc.), 97 F.3d 449, 455 (11th Cir.1996) (holding that Bankruptcy Code § 105 may empower bankruptcy court to bar future contribution claims by nonsettling defendants). In all events, since the Trustee did not request extraordinary equitable relief under Bankruptcy Code § 105, cf. supra Section II.C.1 (bankruptcy court need not determine enforceability of settlement terms which pose no detriment to chapter 7 estate), we need not resolve this question. Absent any clear indication that future contribution claims were foreclosed, we conclude that the bankruptcy court discussed good faith simply as another factor in its best interests analysis, see In re Kuhns, 101 B.R. at 246-47, rather than with a view to barring or otherwise affecting future contribution claims. 39 Accordingly, should Hicks Muse subsequently assert a state-law contribution claim against the Bank Group, it is to be governed by the applicable state law. If the applicable state law were to comport with the good faith standard under Bankruptcy Rule 9019, the Bank Group might prevail on its contention that the settlement order collaterally estops Hicks Muse from relitigating the factual issue as to whether the settlement between the Trustee and the Bankruptcy Group was negotiated in good faith. As there may be no necessary equivalence between Bankruptcy Rule 9019 and applicable nonbankruptcy contribution law regarding the governing good faith standard, we venture no opinion. 40 Affirmed.