Court Opinion

ID: 3036043
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:53:38.004246+00
Date Added: 2024-06-11T11:48:40.256670
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              APR 05 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

In the Matter of: WIRE COMM                      No. 08-17061
WIRELESS, INC.,
                                                 D.C. No. 2:07-cv-02213-MCE
             Debtor.

                                                 MEMORANDUM *
NEW CINGULAR WIRELESS
SERVICES, INC.,

             Appellant,
  v.

RICHARD MCCORMICK; SHIRLEY
MCCORMICK; TIMOTHY
MCCORMICK; RENEE MCCORMICK,

             Appellees,
 and

MICHAEL F. BURKART,

             Trustee.

                   Appeal from the United States District Court
                      for the Eastern District of California
                  Morrison C. England, District Judge, Presiding

        *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                     Argued and Submitted November 4, 2009
                            San Francisco, California

Before: B. FLETCHER, CANBY, and GRABER, Circuit Judges.

      In October 2007, the Bankruptcy Court for the Eastern District of California

issued an order granting approval of a compromise between the Trustee for

now-defunct Wire Comm Wireless, Inc. (“Wire Comm”), and Wire Comm’s

principal shareholders Timothy, Renee, Richard, and Shirley McCormick

(“McCormicks”). As part of the compromise, the Trustee agreed to dismiss a

state-court action New Cingular Wireless Services, Inc. (“New Cingular”) had

brought against the McCormicks, in which the state court had substituted the

Trustee as plaintiff. New Cingular appealed the bankruptcy court’s order

approving the compromise to the District Court for the Eastern District of

California, arguing that the bankruptcy court had failed to provide adequate factual

support for its approval of the compromise. The district court affirmed. New

Cingular now appeals.

      Because the order at issue determined and affected the substantive rights of

the parties, it was, for purposes of appeal, a final order. J.P. Morgan Inv. Mgmt.,

Inc. v. U.S. Tr. (In re Martech USA, Inc.), 188 B.R. 847, 849 (B.A.P. 9th Cir.

1995). We have jurisdiction to hear an appeal from a final order pursuant to

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28 U.S.C. § 158(d). In an appeal from an order affirming the decision of a

bankruptcy court, “our role is essentially the same as that of the district court, and

we are, in essence, reviewing the final order of the bankruptcy court.” Martin v.

Kane (In re A&C Props.), 784 F.2d 1377, 1380 (9th Cir. 1986). “We review the

bankruptcy court’s findings of fact under the ‘clearly erroneous’ standard and its

conclusions of law de novo.” Id. Absent a clear abuse of discretion, we will not

disturb an order granting or denying approval of a compromise. United States v.

Alaska Nat’l Bank of N. (In re Walsh Constr., Inc.), 669 F.2d 1325, 1328 (9th Cir.

1982).

         In considering the proposed compromise, the bankruptcy court found that

one factor weighed most heavily in favor of granting approval, namely, that New

Cingular so lacked confidence in the supposedly meritorious state-court claims that

it repeatedly declined offers to purchase the action at a one-dollar premium. The

only explanation New Cingular gives for its obvious lack of interest is its “belie[f]

[that] the bankruptcy court should, and would, reject the compromise.”

Appellant’s Op. Br. 40. Unfortunately for New Cingular, this explanation

overlooks the reality that the purpose of a compromise is, among other things, “to

avoid the expenses and burdens associated with litigating sharply contested and

dubious claims.” In re A&C Props., 784 F.2d at 1380–81. We think it safe to

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assume that New Cingular, like the Trustee, regarded the state-court claims as

“sharply contested and dubious” and, therefore, less valuable to the estate, in

monetary terms, than the proposed compromise.

      The foremost obligation of a bankruptcy trustee is to “proceed in settling [an

estate’s] accounts on whatever grounds he, in his informed discretion, believes will

net the maximum return for the creditors.” LeBlanc v. Salem (In re Mailman

Steam Carpet Cleaning Corp.), 212 F.3d 632, 635 (1st Cir. 2000). In view of that

obligation, a bankruptcy court enjoys great latitude in approving a proposed

compromise, and a fruitful settlement is always favored over needless litigation. In

re A&C Props., 784 F.2d at 1381–82. Here, the record shows that the bankruptcy

court, in judging the merits of the proposed compromise, carefully considered the

requisite factors, see id. at 1381, and provided ample factual support for its

conclusions. “[A]s 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. The order of the bankruptcy court is, therefore,

      AFFIRMED

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