Court Opinion

ID: 2982054
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:01:27.354611+00
Date Added: 2024-06-11T15:45:16.740523
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                            SEP 22 2015
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
In the Matter of: DARYN                          No. 10-55214
SCHUMACHER,
                                                 D.C. No. 2:08-cv-03027-SVW
              Debtor,

                                                 MEMORANDUM*
DARYN SCHUMACHER,

              Appellant,

  v.

DAVID L. RAY, Chapter 7 Trustee,

              Appellee.

                    Appeal from the United States District Court
                        for the Central District of California
                    Stephen V. Wilson, District Judge, Presiding

                     Argued and Submitted September 2, 2015
                              Pasadena, California

Before: O’SCANNLAIN, FISHER, and BYBEE, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      Alan Schumacher appeals from the district court order affirming the

bankruptcy court order compelling Schumacher to comply with a court-approved

settlement agreement and awarding attorneys’ fees to the bankruptcy trustee.

                                          I

      A party who establishes that a bankruptcy trustee failed to comply with the

notice requirements required to obtain court approval of a settlement agreement

cannot obtain relief from the settlement agreement unless he also establishes that

he has been prejudiced by such defective notice. See Rosson v. Fitzgerald (In re

Rosson), 545 F.3d 764, 776 (9th Cir. 2008) (reviewing defective notice in

bankruptcy proceedings under the harmless error standard); see also Fed. R. Bankr.

P. 9005 (applying to bankruptcy proceedings Fed. R. Civ. P. 61, which describes

the harmless error standard of review). Here, even if the bankruptcy trustee failed

to provide proper notice to one of the bankruptcy estate’s creditors—the probate

estate—Schumacher has failed to establish how such defective notice prejudiced

him in any way. Thus, any defective notice to the probate estate does not render

the settlement agreement unenforceable against Schumacher.

                                         II

      In the settlement agreement, Schumacher merely purports to bind himself,

rather than the probate estate. Under California law, “[o]ne who binds himself to a

                                          2
contract which cannot be performed without the consent or cooperation of a third

person is not relieved of liability because of his inability to secure the required

consent or cooperation.” Hensler v. City of Los Angeles, 268 P.2d 12, 21 (Cal.

Dist. Ct. App. 1954); see also Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989)

(explaining that the construction and enforcement of settlement agreements are

governed by state law). Thus, Schumacher’s inability unilaterally to bind the

probate estate, as one of three co-administrators,1 see Cal. Prob. Code § 9630(a)(2),

has no impact on the underlying validity of the settlement agreement, to which the

probate estate is not a party. To the extent Schumacher signed in his capacity as

co-administrator of the probate estate, we reject his argument that the settlement is

invalid because his probate attorney did not assent; his counsel of record in the

bankruptcy action, where the settlement was approved, did assent, which is all the

authority he relies on would require. See 7 Cal. Jur. 3d Attorneys at Law § 219 (3d

ed. 2015).

      Moreover, there is no indication in the record, nor does Schumacher argue,

that the parties to the settlement agreement contemplated that the agreement’s

formation would be contingent upon approval by the probate estate. Thus, the

      1
        Schumacher’s unopposed motion to take judicial notice, filed on March 2,
2015, is granted.

                                           3
probate estate was not required to approve the agreement in order for the

agreement to be enforceable against Schumacher. See Jacobs v. Freeman, 163 Cal.

Rptr. 680, 687 (Ct. App. 1980) (explaining that only when “reasonable persons

would have understood that the agreement would not be effective when originally

signed” due to the need for third-party approval will the absence of such approval

defeat the formation of the contract).

      Thus, the district court did not err in concluding that the settlement

agreement was valid and enforceable against Schumacher. We note that the

bankruptcy court’s order does not specify any particular manner in which

Schumacher may or must “caus[e]” the probate estate to withdraw its proof of

claim and to release its judgment lien. Neither do we specify any particular means

of performance; nor do we decide what relief the bankruptcy trustee may be

entitled to obtain if Schumacher proves ultimately unable to carry out his

obligations under the settlement agreement.

                                           III

      Because the settlement agreement is enforceable and expressly provides that

the prevailing party in any litigation related to the agreement is entitled to

attorneys’ fees, the district court did not err in affirming the bankruptcy court’s

award of attorneys’ fees to the bankruptcy trustee and in awarding such fees for

                                            4
proceedings before the district court. For the same reason, we remand to the

district court to remand to the bankruptcy court to calculate and to award attorneys’

fees to the bankruptcy trustee in light of this appeal.

      AFFIRMED AND REMANDED WITH INSTRUCTIONS.

                                            5