Court Opinion

ID: 9554731
Source: CourtListenerOpinion
Date Created: 2023-08-09 20:01:18.078048+00
Date Added: 2024-06-11T15:36:42.610029
License: Public Domain

FILED
                          NOT FOR PUBLICATION                                      AUG 9 2023
                                                                              SUSAN M. SPRAUL, CLERK
                                                                                U.S. BKCY. APP. PANEL
           UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
                     OF THE NINTH CIRCUIT

 In re:                                              BAP No. CC-23-1003-LSF
 JOSEPH L. SANDERS,
               Debtor.                               Bk. No. 8:21-bk-12001-TA

 JOSEPH L. SANDERS,
               Appellant,
 v.                                                  MEMORANDUM*
 JOHN WATCHER; MABEL WATCHER;
 KAREN S. NAYLOR, Trustee,
               Appellees.

              Appeal from the United States Bankruptcy Court
                    for the Central District of California
            Theodor C. Albert, Chief Bankruptcy Judge, Presiding

Before: LAFFERTY, SPRAKER, and FARIS, Bankruptcy Judges.

                                 INTRODUCTION

       Debtor Joseph L. Sanders appeals the bankruptcy court’s approval of

a settlement pursuant to Rule 90191 between the chapter 7 trustee, Karen S.

       *
         This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
       1 Unless specified otherwise, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101–1532 and “Rule” references are to the Federal Rules
of Bankruptcy Procedure.
                                            1
Naylor (the “Trustee”), and creditors, John and Mabel Watcher (jointly

with the Trustee, “Appellees”). Because we discern no error, we AFFIRM.

                                       FACTS 2

A.    Prepetition events

      In 2018, John and Mabel Watcher, ages 92 and 85, began litigation in

Orange County Superior Court entitled John Watcher v. American Bankers,

LLC, Rick Floyd, Joseph L. Sanders, et al. (the “State Court Litigation”). The

State Court Litigation was based on loans made by Rick Floyd to others

through his entity American Bankers, LLC (“American Bankers”), in part

using $955,000 the Watchers had advanced for that purpose. Two of the

American Bankers’ loans were made to Sanders; one dated April 7, 2016 for

$110,000 with interest at 11.75% secured by Sanders’ real property located

at 30269 Callaway Circle, Murrieta, CA (the “Callaway Circle Property”);

and one dated November 15, 2016 for $283,000 with interest at 10.99%

secured by Sanders’ real property located at 1 Half Moon Bay, Corona Del

Mar, CA (the “Half Moon Bay Property”). American Bankers was the

payee on the promissory notes and the beneficiary of the two deeds of

trust. The Watchers received payments from Rick Floyd and American

Bankers on their investment including the two Sanders loans until

approximately February 2018 when the payments stopped.

      2
          We exercise our discretion to take judicial notice of documents electronically
filed in the underlying bankruptcy case. See Atwood v. Chase Manhattan Mortg. Co. (In re
Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
                                            2
      The Watchers attempted to serve their complaint on Sanders for

almost a year and a half and finally, with state court approval, served him

by publication. Sanders did not answer the complaint and on April 8, 2021,

the state court entered a default judgment against him and in favor of the

Watchers on the conversion cause of action in the amount of $914,000 in

general damages, and $2,472,000 in treble damages,3 for a total of

$3,386,000 plus costs of suit. The default judgment included damages of

$31,244,000 against Floyd and American Bankers as well as reformation of

the two Sanders promissory notes which substituted the Watchers as the

lender instead of American Bankers, and reformation of the two deeds of

trust on Sanders’ properties which substituted the Watchers as the

beneficiary of each.

      In early 2022, Sanders obtained an order from the state court vacating

the default and judgment against him, permitting him to defend himself.

The basis for vacating the judgment was Sanders’ declaration that he had

no knowledge of the suit. The Watchers appealed that order, and the

appeal was pending when the settlement at issue here was reached. The

set-aside order did not alter the judgment against Floyd or American

Bankers which is now final.

      3
       The default judgment does not specify the basis for the treble damages but the
Watchers assert that it was based on California Penal Code § 496(c) – receiving stolen
property.
                                           3
B.    Sanders’ bankruptcy case

      Sanders filed a chapter 11 petition in 2021. He disclosed ownership

interests in ten real properties with a total value of $13 million. Secured

debt on those properties exceeded $11.6 million which included the

judgment amount owed to the Watchers of $3,386,000. Unsecured debt was

listed as approximately $155,000 owed on several credit cards and no

priority debt.

      Two months into the chapter 11 case, the United States Trustee filed a

motion to convert the case to chapter 7 which the bankruptcy court

granted.

C.    Activities in the chapter 7 case

      1.     The sale of the Half Moon Bay Property

      On June 28, 2022, the bankruptcy court approved the Trustee’s sale of

the Half Moon Bay Property to a third party for $6,060,000.4 The sale closed

on July 29, 2022 with the estate receiving $3,334,466.29 after payment of the

costs of sale and undisputed secured claims. Of that, the Trustee ultimately

paid Sanders $350,000 in settlement of a dispute regarding his homestead

exemption claim.5 The Watchers’ lien attached to the remaining proceeds.

      4  The property had been listed in Sanders’ initial schedule A/B at $3,500,000.
      5
         In his schedule C, Sanders claimed a $600,000 homestead exemption in real
property located at 1049 Baja Street, Laguna Beach, CA 92651, even though his petition
listed his residence as the Half Moon Bay Property. He later amended schedule C to
claim the exemption on the Half Moon Bay Property. The Trustee objected to the
exemption on the Half Moon Bay Property as part of her motion to approve the sale of
that property.
                                           4
      2.      The Watchers’ proof of claim

      The Watchers filed their proof of claim on February 18, 2022 asserting

a secured claim of $4,262,220.26. The claim had four basic components:

      (i)     a $283,000 equitable lien granted by the Superior Court on

              March 7, 2019 and recorded against the Half Moon Bay

              Property;

      (ii)    $419,383.83 owed under the Half Moon Bay Property deed of

              trust, which included accrued interest as of February 15, 2022;

      (iii)   $173,836.43 owed under the Callaway Circle Property deed of

              trust, with accrued interest as of February 15, 2022; and,

      (iv)    the State Court Litigation judgment of $3,386,000 secured by

              abstracts of judgment filed in Orange County and Riverside

              County on June 16, 2021 (i.e., within the preference period).

      The amounts in the proof of claim did not include prepetition and

postpetition attorney’s fees and costs.

      On August 29, 2022, Sanders filed an objection to the Watchers’ proof

of claim. At the initial hearing on the objection, the bankruptcy court set an

evidentiary hearing for December 13, 2022.

      3.      The Watchers’ motion to estimate their claim

      On August 9, 2022, the Watchers filed a motion to estimate their

claim at “$4,518,287.77 pursuant to § 502(c) as a final claim for purposes of

distribution.” In the motion, they broke down the amount of their claim as

follows:

                                        5
           (i) $741,790.24 as secured by the net proceeds of the sale
     of the Half Moon Bay Property as required by the Sale Order;
           (ii) $390,397.53 as secured by the Deed of Trust on the
     Callaway Property; and,
           $3,386,000 as an unsecured claim.
     The secured claim on the Half Moon Bay Property included

approximately $270,000 of attorney’s fees and interest through June 10,

2022. The secured claim on the Callaway Circle Property included

approximately $135,000 in attorney’s fees and interest through July 2022.

     The Watchers included with their motion to estimate their claim a

declaration of creditor Sandra Shohat who stated that she was a personal

friend of Sanders and Floyd. She stated that she personally knew of the

State Court Litigation between the Watchers and Sanders and that she had

text messages (which copies were attached) that establish that Sanders

knew of the existence of the State Court Litigation as well, even though he

declared to the state court that he was unaware that he had been sued by

the Watchers.

     Sanders opposed the motion to estimate the claim arguing that the

Watchers’ claims against him had no merit, contending that the claims

could and should be “resolved with an expedited trial in the state court,”

and generally attacking the Watchers.

     The Trustee filed a statement of position and partial joinder to the

motion advising the bankruptcy court that she supported and joined the

Watchers’ request for estimation of the claim except that she took no

                                     6
position on whether the amount of attorney’s fees included in the claim

were reasonable or otherwise allowable in the amount requested.

       The bankruptcy court requested further briefing and at a hearing on

September 7, 2022, ordered the parties to attend mediation. The motion

was ultimately taken off calendar based on the settlement between the

Trustee and the Watchers as described below.

       4.   The motion to approve the Trustee’s settlement with the
            Watchers
       On September 20, 2022, prior to the mediation, the Trustee and the

Watchers agreed that the Trustee would release $300,000 to the Watchers as

payment of a portion of the Watchers’ secured claim against the Half Moon

Bay Property. The bankruptcy court approved the stipulation the same

day.

       The Watchers, Sanders and the Trustee attended a full-day mediation

with Hon. Scott C. Clarkson on September 26, 2022. By the end of the

mediation, the Trustee and the Watchers agreed on a basic structure for a

settlement with a number of details to be resolved over the following

weeks. Thereafter, the Watchers and the Trustee executed a Settlement

Agreement. The Settlement Agreement included Sanders as a proposed

party, however he did not and has not executed it.

       On November 10, 2022, the Trustee filed her Motion to Approve

Compromise and Settlement Between the Estate and John and Mabel

Watcher Regarding Allowance of Claim (the “Settlement Motion”). The

                                      7
Settlement Motion sets forth the following pertinent provisions in the

Settlement Agreement:

            1. The Allowed Claim. The Watchers’ Claim shall be
     deemed allowed as of October 27, 2022 in the total amount of
     $1,550,000.00 (the “Allowed Claim”). The Allowed Claim shall
     be fixed for all purposes in the Case, including distribution
     pursuant to Section 726 of the Code;
            2. The Components of the Allowed Claim. The Allowed
     Claim shall be allowed as a secured claim in the amount of
     $425,000.00 (the “Secured Portion of the Allowed Claim”), and
     a general unsecured claim in the amount of $1,125,000.00 (the
     “GUC Portion of the Allowed Claim”);
            3. Proposed Distribution from the [Half Moon Bay
     Property] Sale Proceeds. Upon entry of a final order granting
     this Motion, the Trustee will be authorized to distribute to the
     Watchers the sum of $425,000.00 from the [Half Moon Bay
     Property] Sale Proceeds, which distribution shall be in full and
     complete satisfaction of the Secured Portion of the Allowed
     Claim.
            4. Potential Interim Distribution. [omitted here].
            5. Payments on Account of Any Allowed Claims Owing
     by the Debtor to American Bankers. As set forth above, the
     Trustee has been informed by the Debtor that he is indebted to
     American Bankers on account of the Notes. The Watchers have
     obtained a final non-appealable judgment against American
     Bankers, and based thereupon have filed a notice of lien in the
     bankruptcy case evidencing their right to the proceeds of the
     Notes. Accordingly, any distribution on account of the GUC
     Portion of the Allowed Claim shall be applied first to the
     satisfaction of the Notes so as to ensure the Estate will not be

                                     8
      obligated to make any distributions directly to American
      Bankers on account of such Notes.6
             6. Additional Consideration to the Estate for the Proposed
      Settlement. Following entry of a final 9019 Order, and payment
      to the Watchers of the Secured Portion of the Allowed Claim,
      the Watchers shall file or record a notice of reconveyance of the
      deed of trust they assert against the [Half Moon Bay] Property
      in a format satisfactory to Lawyers Title Co. In addition, upon
      satisfaction in full of the GUC Portion of the Allowed Claim,
      the Watchers shall file or record a notice of release of any
      interest they assert in the deed of trust against the Callaway
      [Circle] Property in a format satisfactory to Lawyers Title Co.
      As the Watchers had just received $300,000 from the Trustee, the total

settlement was $1,850,000, of which the Watchers would receive an

additional $425,000 when the Settlement Motion was granted, and an

unsecured claim of $1,125,000. The $725,000 in present payments

approximated the amount they were owed on the Half Moon Bay Property

including interest and attorney’s fees through approximately June, 2022.

      The Settlement Agreement did not include any general releases. It

included a provision that if Sanders opposed the upcoming Settlement

Motion, the Watchers would retain their rights to proceed against him

      6  As the Watchers claimed a lien on the debt Sanders owed to American Bankers,
subsequent payments by the estate to American Bankers would be paid to the
Watchers. This would result in them receiving more than the settlement amount from
the estate. The parties designed Part 5 to treat the Trustee’s payments to the Watchers as
also a payment on Sanders’ debt owed to American Bankers. Therefore, the payment to
the Watchers reduced both their claim against the estate as well as American Bankers’
claim against the estate.
                                            9
including in their pending non-dischargeability adversary proceeding

against him.

      Sanders opposed the Settlement Motion arguing, as he does here, that

based on the set-aside of the state court default judgment, the damages

awarded against him, including the treble damages, were unliquidated

and, in his view, were likely to be reduced by the state court to very little

once he had a chance to defend himself. He also asserted that the

bankruptcy court denied him due process by ruling on the Settlement

Motion because it was a non-core proceeding. He requested an evidentiary

hearing. No other party objected.

      At the hearing on the Settlement Motion, the bankruptcy court heard

considerable argument by Sanders, the Watchers, and the Trustee. The

court adopted its lengthy tentative ruling going through the factors in

Martin v. Kane (In re A & C Properties), 784 F.2d 1377, 1381 (9th Cir. 1986) in

detail. It made comments focusing on the uncertainty of the cost of the

litigation if it were to proceed, the delay in getting creditors paid, and the

possibility that the Watchers’ judgment might ultimately survive the set-

aside order which could increase their claim to more than $5 million.

      The bankruptcy court approved the settlement and Sanders timely

appealed.

                               JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(A) and (O). We have jurisdiction under 28 U.S.C. § 158.

                                       10
                                      ISSUE

      Did the bankruptcy court err in approving the compromise between

the Trustee and the Watchers?

                          STANDARDS OF REVIEW

      Whether a bankruptcy court has jurisdiction is a question of law

reviewed de novo. Marciano v. Fahs (In re Marciano), 459 B.R. 27, 34 (9th Cir.

BAP 2011), aff’d, 708 F.3d 1123 (9th Cir. 2013). “De novo review requires

that we consider a matter anew, as if no decision had been made

previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP

2014). Moreover, whether the Settlement Motion was a core proceeding

giving the bankruptcy court the judicial power to rule on the Settlement

Motion is a question of law which we review de novo.

      We review the bankruptcy court’s decision to approve a compromise

for abuse of discretion. Goodwin v. Mickey Thompson Ent. Grp., Inc. (In re

Mickey Thompson Ent. Grp., Inc.), 292 B.R. 415, 420 (9th Cir. BAP 2003); see In

re A & C Prop., 784 F.2d at 1380. Similarly, “[a] court’s decision whether to

hold an evidentiary hearing is also reviewed for an abuse of discretion.”

Zurich Am. Ins. Co. v. Int'l Fibercom, Inc. (In re Int'l Fibercom, Inc.), 503 F.3d

933, 939-40 (9th Cir. 2007).

      To determine whether the bankruptcy court has abused its discretion,

we conduct a two-step inquiry: (1) we review de novo whether the

bankruptcy court “identified the correct legal rule to apply to the relief

requested” and (2) if it did, we consider whether the bankruptcy court's

                                         11
application of the legal standard was illogical, implausible, or without

support in inferences that may be drawn from the facts in the record.

United States v. Hinkson, 585 F.3d 1247, 1262-63 & n.21 (9th Cir. 2009) (en

banc).

                                DISCUSSION

      Sanders argues that the bankruptcy court abused its discretion for

three reasons: first, the bankruptcy court should have made a specific

finding on the probability of whether the Watchers would prevail should

the matter proceed in state court; second, the bankruptcy court gave undue

weight to the factors of delay in litigation, costs of litigation, and the ages

of the Watchers; and third, the bankruptcy court considered improper

factors such as Sanders’ conduct in the bankruptcy case to date and his

relationship with Floyd.

A.    The bankruptcy court properly identified the A & C Properties
      factors to evaluate the fairness and reasonableness of the
      settlement.
      Rule 9019(a) provides that, “[o]n motion by the trustee and after

notice and a hearing, the court may approve a compromise or settlement.”

“The bankruptcy court has great latitude in approving compromise

agreements.” Woodson v. Fireman’s Fund Ins. Co. (In re Woodson), 839 F.2d

610, 620 (9th Cir. 1988) (citation omitted). The Ninth Circuit has directed

that the bankruptcy court must determine that the compromise is “fair and

equitable” based on four factors:

                                       12
             (a) The probability of success in the litigation; (b) the
      difficulties, if any, to be encountered in the matter of collection;
      (c) the complexity of the litigation involved, and the expense,
      inconvenience and delay necessarily attending it; (d) the
      paramount interest of the creditors and a proper deference to
      their reasonable views [].
In re A & C Prop., 784 F.2d at 1381 (citation omitted). The law favors

compromise, “and as long as the bankruptcy court amply considered the

various factors that determined the reasonableness of the compromise, the

court’s decision must be affirmed.” Id. (citation omitted).

      “Each factor need not be treated in a vacuum; rather, the factors

should be considered as a whole to determine whether the settlement

compares favorably with the expected rewards of litigation.” Grief & Co. v.

Shapiro (In re W. Funding Inc.), 550 B.R. 841, 851 (9th Cir. BAP 2016), aff’d,

705 F. App’x 600 (9th Cir. 2017). Ultimately, “[t]he trustee, as the party

proposing the compromise, has the burden of persuading the bankruptcy

court that the compromise is fair and equitable and should be approved.”

In re A & C Prop., 784 F.2d at 1381 (citation omitted).

      The bankruptcy court “need not rule upon disputed facts and

questions of law, but only canvass the issues. A mini trial on the merits is

not required.” Burton v. Ulrich (In re Schmitt), 215 B.R. 417, 423 (9th Cir.

BAP 1997) (citations omitted).

B.    The bankruptcy court did not err in applying the A & C Properties
      factors.
      1.    Probability of success

                                       13
      Sanders is adamant that he would be successful if he were permitted

to defend himself in the State Court Litigation. He argues that the

Watchers’ investments were not made with him; in fact, he claims he never

even met them. He argues therefore that he could not have taken their

money improperly, and thus the conversion cause of action must fail.

Sanders argues that the Watchers have a low probability of obtaining “any

recovery.”

      But Sanders ignores the fact that the state court reformed the two

promissory notes in favor of the Watchers and its judgment is now final.

He conceded at oral argument that he was liable to the Watchers on the

notes irrespective of the liens. As to the amount owed on the loans, Sanders

argues that the total amount loaned to him was $393,000 (in 2016) and

suggests that the recovery should be limited to that amount. This argument

ignores the interest at 10.99% on the Half Moon Bay Property loan and

11.75% on the Callaway Circle Property loan and the late charges and

attorney’s fees to enforce the notes. With unpaid interest accruing since the

payments stopped in early 2018, the total amount owed on those two loans

was at least $1 million at the time of the settlement. The Watchers are

entitled to receive that amount from the proceeds of the sale of the two

properties irrespective of the results of the State Court Litigation.

      The settlement reduced the Watchers’ general unsecured claim of

$3,386,000 (plus interest at 10% for the past two years if the judgment is

upheld) to $1,125,000 (although payment of that amount will also satisfy
                                       14
their secured claim of $400,000 on the Callaway Circle Property). The

Watchers’ unsecured claim will be paid pro-rata with the other unsecured

creditors after payment of all administrative costs including those of the

Trustee and her counsel (although it appears likely that there are sufficient

funds in the estate to pay all claims in full).

      The Trustee argues that the Watchers “have an ironclad conversion

action against [Sanders] for wrongfully retaining the Watchers’ stolen

money in the face of multiple demands to turn over the stolen property.”

Appellee Opening Br. p. 23. (emphasis in original). She believes that the

Watchers are likely to recover “well in excess of $1.85 million with respect

to the claims.” Id. p. 22.

      The bankruptcy court acknowledged that it was unable to evaluate

with any precision the likelihood that the Watchers would be successful

first in getting the set-aside order reversed and then in prevailing at trial.

But the court is not required to make such a finding. There is no right to a

mini trial.

      Given the risks and uncertainties, the bankruptcy court did not err in

finding that this factor weighed in favor of the settlement.

      2.      Difficulty of collection

      The parties agreed this factor does not apply.

                                         15
      3.      The complexity of the litigation involved, and the expense,
              inconvenience, and delay
      Assuming the Watchers’ appeal in state court was unsuccessful, their

claim would have to be liquidated. That would be a contested matter

resulting in motions, discovery, and likely a lengthy trial. The litigation

would be both legally and factually complex. There had been no significant

activity in the state court case other than the default prove-up hearing.

      Absent the settlement, the estate faced either a potential reversal of

the set-aside order resulting in affirmance of the full amount of the

judgment plus interest for at least two years, or litigation which was likely

to be lengthy and expensive. The attorney’s fees and costs incurred in

continuing the litigation would likely approximate some meaningful

portion of the settlement amount of $1,125,000. The Trustee’s failure in the

litigation could lead to the full amount of the judgment being allowed, or a

$4 to $5 million claim after the expense of litigation.

      Even if Sanders agreed to shoulder the cost of the litigation, which he

did not and has not offered, the cost to the estate would be significant. 7 The

bankruptcy court properly considered the expense, inconvenience, and

delay which would be caused if the litigation continued. The bankruptcy

court did not err in concluding that this factor weighed in favor of the

settlement.

      7
         Sanders’ counsel’s statement at oral argument that Sanders was ready to fund
the litigation, assuming it is true, is too little, too late.
                                          16
      4.     Best interests of the creditors

      Finally, the bankruptcy court considered the “paramount interests of

the creditors and gave proper deference to their views.” In re A & C Prop.,

784 F.2d at 1381. As this appears to be a solvent estate, especially given the

reduction of the Watchers’ claim via the settlement, all creditors will likely

be paid in full. It is in the best interest of creditors that they be paid sooner

rather than later.

      The bankruptcy court identified the correct legal rule via the factors

set forth in A & C Properties. We cannot say that its application of the rule

was illogical, implausible, or without support in inferences that may be

drawn from the facts in the record.

C.    Sanders’ further arguments fail.

      1.     Sanders was not denied due process by the approval of the
             Settlement Motion.
      Sanders argues that the bankruptcy court “abused its discretion

because the resolution of non-core claims via summary approval of the

compromise without an evidentiary hearing deprived Sanders of due

process.” 8 Opening Br., p. 24. He argues that the conversion claim “rests on

California substantive law and is, thus, not a core-proceeding” citing

Maitland v. Mitchell (In re Harris Pine Mills), 44 F.3d 1431, 1436 (9th Cir.

1995) to support that statement. We disagree.

      8
        Sanders notes in his required Jurisdictional Statement in his Opening Brief that
“[a]pproval of the settlement was a core proceeding pursuant to 28 U.S.C. § 157(b).”
Opening Br., Pg. 10.
                                           17
      In Harris Pine Mills, a purchaser of certain assets of a bankruptcy

estate sued the chapter 7 trustee in state court alleging state court causes of

action. The trustee removed the matter to the bankruptcy court which

thereafter entered judgment for the trustee. The purchaser asserted that the

matter was not core and therefore the bankruptcy court did not have

judicial power to enter a final judgment in the matter. The Ninth Circuit

disagreed ruling that the claims against the trustee were core because the

conduct of the trustee at issue was inextricably intertwined with the

trustee’s sale of property belonging to the estate. Id. at 1438.

      The Ninth Circuit in Harris Pine Mills noted that a core proceeding is

one that invokes a substantive right created by federal bankruptcy law

which does not exist outside of bankruptcy. Id. Proceedings under Rule

9019 are core because the power of the trustee to settle claims is a

fundamental part of federal bankruptcy law and does not exist outside of

the bankruptcy realm.

      Further, Congress provided in 28 U.S.C. § 157(b) a list of 16 examples

of core proceedings, which included (A) matters concerning the

administration of the estate; (B) allowance or disallowance of claims

against the estate. . .; (O) other proceedings affecting the liquidation of the

assets of the estate or the adjustment of the debtor-creditor . . . relationship,

except personal injury tort or wrongful death claims. The Settlement

Motion implicates each of the three examples. See In re ISE Corp., Case No.

10-14198-MM 11, 2012 WL 1377085, at *4 (Bankr. S.D. Cal. Apr. 13, 2012)

                                       18
(finding approval of a settlement agreement to be core proceeding) (citing

Harris v. Wittman, (In re Harris), 590 F.3d 730, 738 (9th Cir. 2009) (explaining

that matters involving the implementation of the parties’ settlement

agreement was within bankruptcy court’s core jurisdiction.)).

      The Settlement Motion concerned the administration of the estate.

See, e.g., In re Moses, 225 B.R. 360, 364 (E.D. Mich. 1998) (“In this case, the

Bankruptcy Court’s ruling on the settlement motion was a matter

‘concerning the administration of the estate’ because it dealt specifically

with the disposition of the property of the estate.”). The Settlement

Agreement concerned the allowance or disallowance of a claim against the

estate and adjusted the debtor-creditor relationship by ending the State

Court Litigation. “[T]he restructuring of debtor-creditor relations . . . is at

the core of the federal bankruptcy power,” Northern Pipeline Constr. Co. v.

Marathon Pipe Line Co., 458 U.S., 50, 71 (1982). The bankruptcy court had the

judicial power to grant the Settlement Motion and to enter a final order

thereon because it was a core proceeding.

      Sanders also argues that he has been deprived of due process because

the Watchers’ claims (against him) are “speculative” and there is “no

evidentiary basis” to support a judgment (against him) which is, he argues,

required before the court can approve the motion. We disagree.

      The Trustee settled the claim against the estate. The settlement does

not finally resolve the issues between Sanders and the Watchers because of

the pending non-dischargeability action. The Watchers have not released

                                        19
Sanders under the Settlement Agreement which specifically provides that

“in the event that [Sanders] opposes the Trustee’s 9019 Motion, the

Watchers reserve all of their rights and remedies to enforce their claims

against [Sanders].” As Sanders opposed the Settlement Motion, the

Watchers are entitled to proceed with their pending adversary proceeding

against him to determine whether any amount of the debt will survive the

bankruptcy proceeding. He will be able to litigate the issues at that time.

      2.     Sanders has no right to an offset based on the Watchers’
             recoveries against other parties.
      Sanders argues that because the Watchers have apparently recovered

$444,000 from three other parties in the State Court Litigation, 9 those

payments “have the impact of lowering the Watchers’ claims.” Opening

Br., p. 30-31. Sanders offers no factual or legal basis to support that

position.

      3.     The bankruptcy court did not err by considering Sanders’
             general conduct in the bankruptcy case and his relationship
             with Floyd.
      Sanders argues that the bankruptcy court considered improper

factors such as Sanders’ conduct in the bankruptcy case to date and his

relationship with Floyd. Sanders takes offense to the bankruptcy court’s

comment that he is not “’exactly an altar boy’ and had not cooperated with

the bankruptcy process.” Opening Br., p. 36. He argues without legal

      9
       These payments were disclosed to the bankruptcy court by the Trustee in the
Settlement Motion. Estate of Wilber Sowers, $25,000; John Edward, $170,000; and
Katherine Floyd, $249,030.
                                         20
support that these were improper factors “which require reversal.” He cites

Jen Hung Ng v. INS, 804 F.2d 534, 538 (9th Cir. 1986) for support but that

case does not discuss which factors may or may not be proper in

considering a Rule 9019 motion.

      More importantly, permitting the litigation to proceed would require

the Trustee to partner up with Sanders whose dependability is dubious, as

evidenced by his conduct in the bankruptcy case. This is a relevant factor

when considering the probability of success in what will be complex

litigation. Sanders’ relationship with Floyd is also relevant to the

conversion claim since his entreaties that he was a stranger to the Watchers

may ring hollow when considering the use of and whereabouts of the

Watchers’ funds. The bankruptcy court noted these anomalies and we

cannot second guess the Trustee’s concern.

D.    The bankruptcy court did not err in declining to hold an
      evidentiary hearing.
      Finally, Sanders argues that the bankruptcy court erred in rejecting

his request for discovery and an evidentiary hearing. We disagree.

      The bankruptcy court was within its discretion when it declined to

draw out the proceedings any further with discovery and an evidentiary

hearing. It was not required to make factual determinations on every

disputed issue. See In re Int’l Fibercom, Inc., 503 F.3d at 946 (holding that,

where there was an adequate factual basis for the bankruptcy court’s

decision, an evidentiary hearing was unnecessary); Aguina v. Kang (In re

                                        21
Aguina), Case No. CC-21-1163-FLS, 2022 WL 325579, at *8 (9th Cir. BAP

Feb. 3, 2022) (“Rule 9019 does not require an evidentiary hearing on every

settlement agreement presented to the Court” quoting In re Kent, Case No.

07-BK-03238-SSC, 2008 WL 5047821, at *1 (Bankr. D. Ariz. July 25, 2008)).

The bankruptcy court’s decision to approve the Settlement Motion had an

adequate factual basis.

                             CONCLUSION

     The bankruptcy court did not abuse its discretion in approving the

compromise between the Trustee and the Watchers. We AFFIRM.

                                     22