Opinion ID: 4013722
Heading Depth: 1
Heading Rank: 4

Heading: Denial of Motion to Approve Settlement

Text: Next, Appellants argue that the bankruptcy court abused its discretion in denying Steward’s motion to approve the parties’ settlement agreement. Appellants did not raise this argument before the district court. We therefore do not reach the question of whether the bankruptcy court abused its discretion in rejecting the settlement, see Ames, 760 F.3d at 770, and note only in passing that the bankruptcy court rejected the settlement without prejudice based on the parties’ failure to meet -14- a procedural requirement,9 an action highly unlikely to constitute an abuse of discretion. See Fed. R. Bankr. P. 9019 (the bankruptcy court may approve a settlement only “[o]n motion by the trustee and after notice and a hearing”); In re Cockhren, 468 B.R. 838, 844 (B.A.P. 8th Cir. 2012) (we review the bankruptcy court’s decision to approve or reject a settlement for abuse of discretion, which “occurs if the court bases its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidences”). Appellants did, however, raise a related issue before the district court, arguing that the bankruptcy court erred by ordering Steward to accept discovery and by sanctioning Appellants for their failure to meet their discovery obligations after the parties had ostensibly reached an agreement that did not require the discovery process to continue. They argue that when the parties settled, the bankruptcy court no longer had authority to impose sanctions based on their refusal to comply with the court’s prior orders. This issue is easily resolved based on the fact that, as the district court correctly determined, the case was never actually settled. See In re Petters Co., 455 B.R. 166, 172 (B.A.P. 8th Cir. 2011) (settlement is contingent on the bankruptcy court’s approval). Though Steward had filed a motion for approval of the parties’ settlement agreement, the bankruptcy court denied that motion without prejudice based on Fed. R. Bankr. P. 9019’s requirement that such a motion be filed by the Chapter 7 Trustee. Appellants cite no authority to support the proposition that merely filing a motion to approve a settlement divests the bankruptcy court of authority to manage the progress of a case. Because settlement in this case was never completed, 9 We again note some inconsistency in both requiring that the trustee file the motion to approve settlement and finding that the trustee had previously abandoned Steward’s claim for disgorgement on behalf of the estate. However, the bankruptcy court correctly applied the letter of Rule 9019 based on the circumstances of the case before it at the time, and any inconsistency is the result of Appellants’ failure to raise their claims before the lower courts. -15- the bankruptcy court retained authority to order Steward to accept discovery and to sanction Appellants for failing to comply with the court’s orders.