NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 17 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: AGUINA AGUINA, No. 22-60005
Debtor, BAP No. 21-1163
------------------------------ MEMORANDUM* AGUINA AGUINA,
Appellant,
v.
CHOONG-DAE KANG; et al.,
Appellees.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel Faris and Lafferty III, Bankruptcy Judges, Presiding
Submitted January 9, 2023** Pasadena, California
Before: CALLAHAN, R. NELSON, and H.A. THOMAS, Circuit Judges.
Chapter 7 debtor Aguina Aguina appeals from the Bankruptcy Appellate
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Panel for the Ninth Circuit (BAP), which affirmed the bankruptcy court’s approval
of a settlement agreement between the bankruptcy trustee, Karl T. Anderson, and
Aguina’s primary creditors: his ex-wife, Choong-Dae Kang, and her siblings
(Kang Parties). In re Aguina, No. CC-21-1163, 2022 WL 325579, at *1. We
review the BAP’s decision de novo and “apply the same standard of review that
the BAP applied to the bankruptcy court’s ruling”—here, abuse of discretion. In re
Ahaza Sys., Inc., 482 F.3d 1118, 1123 (9th Cir. 2007). We have jurisdiction
pursuant to 28 U.S.C. § 158(d). We affirm.
1. “Only those persons who are directly and adversely affected pecuniarily
by an order of the bankruptcy court . . . have standing to appeal that order.” Matter
of Fondiller, 707 F.2d 441, 442 (9th Cir. 1983). The trustee argues that Aguina
lacks standing because “there is no reasonable possibility” that the bankruptcy
estate, after satisfying all of its debts, will have a surplus available with which to
pay Aguina. We disagree. If we were to reverse the BAP’s decision and order that
it vacate the bankruptcy court’s approval of the settlement agreement, there would
exist a possibility—however remote—that the family court would make
determinations concerning community property and community debt that would,
upon satisfaction of the bankruptcy estate’s debts, produce a surplus for Aguina.
2 Because Aguina is thus not “hopelessly insolvent,” he has standing to appeal the
BAP’s order. See id.
2. A bankruptcy court abuses its discretion either (i) by applying an incorrect
legal rule for the sort of relief requested (an issue which we review de novo), or
(ii) by applying the correct legal rule in a way that is “illogical, implausible, or
without support in inferences that may be drawn from the facts in the record.” In re
Taylor, 599 F.3d 880, 887–88 (9th Cir. 2010). Here, the bankruptcy court correctly
applied the four-factor test set forth in In re A & C Properties, 784 F.2d 1377,
1381 (9th Cir. 1986), to determine that the settlement agreement between the
trustee and the Kang Parties was fair and equitable. That test requires a court
reviewing a bankruptcy settlement agreement to consider “(a) [t]he 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 the premises.” Id.
While reasonable minds might disagree about its conclusions, the bankruptcy
court’s application of the A & C Properties test was logical, plausible, and
supported by inferences that could be drawn from facts in the record. See id. (“The
law favors compromise and not litigation for its own sake, . . . and as long as the
bankruptcy court amply considered the various factors that determined the
3 reasonableness of the compromise, the court's decision must be affirmed.”)
(citation omitted).
First, the court considered the paramount interest of the creditors. See id.
The court noted that the seven remaining claims in the bankruptcy case would be
resolved by the agreement, five of them by voluntary withdrawal and two of them
by using the funds the Kang Parties would give to the trustee as part of the
settlement. Given that the agreement would resolve all of the remaining creditors’
claims, the court did not abuse its discretion in concluding that that this factor
supported approval of the agreement.
Second, the court considered the complexity of the litigation, as well as any
related expense, inconvenience, and delay. See id. The court found that Aguina had
been litigating with the Kang Parties for many years and that a rejection of the
proposed agreement would potentially lead to many more years of litigation,
adding expense, inconvenience, and delay for all concerned parties. Since the
settlement would bring the litigation to an end, the court plausibly concluded that it
would be “very wise” and “very advantageous” to approve the settlement.
Third, the court considered any difficulties to be encountered in collection,
namely the collection of funds that would have to change hands in fulfillment of
the settlement agreement. See id. On the record, counsel for the Kang Parties
represented that he had all of the promised funds in a trust account and was
4 prepared to facilitate collection by the trustee. The court did not abuse its
discretion in relying upon this representation to conclude that this factor also
Fourth and finally, the court considered the probability of success in the
litigation over the dissolution of Aguina’s and Choong-Dae Kang’s marriage. See
id. The court noted that the proposed agreement would result in a waiver of claims
by the Kang Parties, including the waiver of any claims Choong-Dae Kang was
pursuing in the dissolution action. Since the settlement would resolve the litigation
without placing any new obligations on Aguina, it was logical for the bankruptcy
court to conclude that the agreement was a preferable alternative to continuing
litigation.
3. Aguina’s objections to the bankruptcy court’s ruling are without merit.
Though not clearly articulated by Aguina, his strongest objection is that the
settlement agreement should be reversed because it is not “in the best interests of
the estate.” See In re Mickey Thompson Ent. Grp., Inc., 292 B.R. 415, 422 (9th Cir.
BAP 2003). Aguina states that Choong-Dae Kang possesses “numerous properties
and great wealth” which “most likely have a community property component,” and
that Kang therefore possesses “property belonging to Aguina and to the
Bankruptcy Estate.” He thus implies that (i) the trustee’s calculations do not
5 account for these potential assets, and (ii) the proposed settlement is therefore
unfair and inequitable. We reject these contentions.
Free access — add to your briefcase to read the full text and ask questions with AI
NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JAN 17 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: AGUINA AGUINA, No. 22-60005
Debtor, BAP No. 21-1163
------------------------------ MEMORANDUM* AGUINA AGUINA,
Appellant,
v.
CHOONG-DAE KANG; et al.,
Appellees.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel Faris and Lafferty III, Bankruptcy Judges, Presiding
Submitted January 9, 2023** Pasadena, California
Before: CALLAHAN, R. NELSON, and H.A. THOMAS, Circuit Judges.
Chapter 7 debtor Aguina Aguina appeals from the Bankruptcy Appellate
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Panel for the Ninth Circuit (BAP), which affirmed the bankruptcy court’s approval
of a settlement agreement between the bankruptcy trustee, Karl T. Anderson, and
Aguina’s primary creditors: his ex-wife, Choong-Dae Kang, and her siblings
(Kang Parties). In re Aguina, No. CC-21-1163, 2022 WL 325579, at *1. We
review the BAP’s decision de novo and “apply the same standard of review that
the BAP applied to the bankruptcy court’s ruling”—here, abuse of discretion. In re
Ahaza Sys., Inc., 482 F.3d 1118, 1123 (9th Cir. 2007). We have jurisdiction
pursuant to 28 U.S.C. § 158(d). We affirm.
1. “Only those persons who are directly and adversely affected pecuniarily
by an order of the bankruptcy court . . . have standing to appeal that order.” Matter
of Fondiller, 707 F.2d 441, 442 (9th Cir. 1983). The trustee argues that Aguina
lacks standing because “there is no reasonable possibility” that the bankruptcy
estate, after satisfying all of its debts, will have a surplus available with which to
pay Aguina. We disagree. If we were to reverse the BAP’s decision and order that
it vacate the bankruptcy court’s approval of the settlement agreement, there would
exist a possibility—however remote—that the family court would make
determinations concerning community property and community debt that would,
upon satisfaction of the bankruptcy estate’s debts, produce a surplus for Aguina.
2 Because Aguina is thus not “hopelessly insolvent,” he has standing to appeal the
BAP’s order. See id.
2. A bankruptcy court abuses its discretion either (i) by applying an incorrect
legal rule for the sort of relief requested (an issue which we review de novo), or
(ii) by applying the correct legal rule in a way that is “illogical, implausible, or
without support in inferences that may be drawn from the facts in the record.” In re
Taylor, 599 F.3d 880, 887–88 (9th Cir. 2010). Here, the bankruptcy court correctly
applied the four-factor test set forth in In re A & C Properties, 784 F.2d 1377,
1381 (9th Cir. 1986), to determine that the settlement agreement between the
trustee and the Kang Parties was fair and equitable. That test requires a court
reviewing a bankruptcy settlement agreement to consider “(a) [t]he 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 the premises.” Id.
While reasonable minds might disagree about its conclusions, the bankruptcy
court’s application of the A & C Properties test was logical, plausible, and
supported by inferences that could be drawn from facts in the record. See id. (“The
law favors compromise and not litigation for its own sake, . . . and as long as the
bankruptcy court amply considered the various factors that determined the
3 reasonableness of the compromise, the court's decision must be affirmed.”)
(citation omitted).
First, the court considered the paramount interest of the creditors. See id.
The court noted that the seven remaining claims in the bankruptcy case would be
resolved by the agreement, five of them by voluntary withdrawal and two of them
by using the funds the Kang Parties would give to the trustee as part of the
settlement. Given that the agreement would resolve all of the remaining creditors’
claims, the court did not abuse its discretion in concluding that that this factor
supported approval of the agreement.
Second, the court considered the complexity of the litigation, as well as any
related expense, inconvenience, and delay. See id. The court found that Aguina had
been litigating with the Kang Parties for many years and that a rejection of the
proposed agreement would potentially lead to many more years of litigation,
adding expense, inconvenience, and delay for all concerned parties. Since the
settlement would bring the litigation to an end, the court plausibly concluded that it
would be “very wise” and “very advantageous” to approve the settlement.
Third, the court considered any difficulties to be encountered in collection,
namely the collection of funds that would have to change hands in fulfillment of
the settlement agreement. See id. On the record, counsel for the Kang Parties
represented that he had all of the promised funds in a trust account and was
4 prepared to facilitate collection by the trustee. The court did not abuse its
discretion in relying upon this representation to conclude that this factor also
Fourth and finally, the court considered the probability of success in the
litigation over the dissolution of Aguina’s and Choong-Dae Kang’s marriage. See
id. The court noted that the proposed agreement would result in a waiver of claims
by the Kang Parties, including the waiver of any claims Choong-Dae Kang was
pursuing in the dissolution action. Since the settlement would resolve the litigation
without placing any new obligations on Aguina, it was logical for the bankruptcy
court to conclude that the agreement was a preferable alternative to continuing
litigation.
3. Aguina’s objections to the bankruptcy court’s ruling are without merit.
Though not clearly articulated by Aguina, his strongest objection is that the
settlement agreement should be reversed because it is not “in the best interests of
the estate.” See In re Mickey Thompson Ent. Grp., Inc., 292 B.R. 415, 422 (9th Cir.
BAP 2003). Aguina states that Choong-Dae Kang possesses “numerous properties
and great wealth” which “most likely have a community property component,” and
that Kang therefore possesses “property belonging to Aguina and to the
Bankruptcy Estate.” He thus implies that (i) the trustee’s calculations do not
5 account for these potential assets, and (ii) the proposed settlement is therefore
unfair and inequitable. We reject these contentions.
In filing for bankruptcy, all of Aguina’s legal and equitable interests,
including all of Aguina’s interests in community property, became the property of
the bankruptcy estate. See 11 U.S.C. § 541(a). The bankruptcy court therefore
came to have exclusive jurisdiction over all of Aguina’s interests in community
property, despite ongoing community property disputes in Aguina’s dissolution
proceedings with Choong-Dae Kang. See In re Teel, 34 B.R. 762, 763–64 (9th Cir.
BAP 1983). And the trustee’s primary responsibility was to administer the assets of
the estate for the benefit of Aguina’s creditors, see In re DBSI, Inc., 869 F.3d 1004,
1016 (9th Cir. 2017), even if Aguina thought he could have “handled his financial
affairs in a more advantageous way outside of bankruptcy.”
The trustee explained to the court that after carefully considering the
ongoing dissolution proceedings and reviewing various documents concerning the
potential community property assets, he concluded that the proposed settlement
was “in the best interest of the estate.” In various filings, he also provided the
bankruptcy court with reason to believe that the potential community property
assets were not of significant value and that it would be both expensive and
6 impractical to liquidate them. The bankruptcy court did not abuse its discretion in
relying on this information and discounting Aguina’s objection.
Aguina also argues that the court was “obliged to consider, as part of [its]
‘fair and equitable’ analysis, whether any property of the estate that would be
disposed of in connection with the settlement might draw a higher price through a
competitive process and be the proper subject of a sale under 11 U.S.C. § 363.” In
re Thompson, 292 B.R. at 422. After learning of the proposed settlement
agreement, Aguina offered the bankruptcy estate $53,000—a “higher price” than
the $49,726.77 the Kang Parties were willing to pay the trustee in fulfillment of the
settlement agreement. Aguina argues that his superior offer should have led the
bankruptcy court to consider a sale under section 363 or that the court should have
at least provided a “reasoned explanation” for choosing not to do so. See In re
Woodson, 839 F.2d 610, 621 (9th Cir. 1988) (“Broad as the bankruptcy court’s
power may be, it may not completely ignore a nonfrivolous objection, at least
without giving a reasoned explanation for doing so.”). We are not persuaded that
the settlement amounted to an asset sale under In re Thompson, given the mutual
release of claims. See In re Thompson, 292 B.R. at 421 (concluding a proposed
settlement where estate unilaterally released its claims amounted to an asset sale).
To the extent that the bankruptcy court was required to consider Aguina’s offer, its
statement that Aguina failed to present a way to “extinguish or eliminate” the Kang
7 Parties’ most significant claims against him as creditors was ample support for its
decision to approve the trustee’s proposed settlement, despite Aguina’s offer.
Aguina’s remaining objections also fail. The bankruptcy court did indeed
mention the particular facts of this case in its order; though public policy is not one
of the four A & C Properties factors, it nevertheless supports ending a dispute that
has long been a drain on taxpayer money and judicial resources; and Aguina has
failed to demonstrate that the settlement agreement is illegal or allows a party to
take advantage of its wrongdoing.
AFFIRMED.