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In Re v. Nancy Hoffmeier Zamora

February 1, 2011

IN RE:
CARY E. MARLOW,
DEBTOR. CARY E. MARLOW, APPELLANT,
v.
NANCY HOFFMEIER ZAMORA, TRUSTEE, APPELLEE.



Appeal from the United States Bankruptcy Court for the Central District of California Honorable Kathleen Thompson, Bankruptcy Judge, Presiding Bk. No. SV-09-23891-KT

SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

MEMORANDUM*fn1

Submitted Without Oral Argument on January 21, 2011*fn2

Filed - February 1, 2011

Before: PAPPAS, DUNN and KIRSCHER, Bankruptcy Judges.

Chapter 7*fn3 debtor Cary E. Marlow ("Marlow") appeals the bankruptcy court's order granting a motion by chapter 7 trustee Nancy Hoffmeier Zamora ("Trustee") to approve a settlement agreement between Trustee and Jennifer King ("King"). We AFFIRM.

FACTS

In September 2006, Marlow and King orally agreed that Marlow would be general contractor in a project to improve King's real property in Studio City, California. Between September 2006 and October 2007, Marlow performed services on this project for which he billed King in excess of $700,000, and received payments in excess of $550,000. When a dispute arose between the parties, on March 4, 2009, Marlow sued King for breach of contract in Los Angeles County Superior Court, Marlow v. King, case no. LC081209 (the "State Court Action"), alleging that King had failed to pay Marlow the balance of $132,616.23 for his services. King filed a cross-complaint against Marlow for $400,000 to $500,000 in damages.*fn4

1 On October 23, 2009, Marlow filed a chapter 7 bankruptcy 2 petition. In his Schedule B, he listed his lawsuit against King, 3 stating his claim as $132,616.24, with a cross-complaint for 4 $400,000--$500,000, having a net current value of $0.00. He did 5 not claim an exemption in the lawsuit on his Schedule C. Nancy 6 Hoffmeier Zamora was appointed chapter 7 trustee.

7 Shortly after the filing of the petition, Trustee and King's 8 counsel negotiated a Compromise by which King agreed to pay 9 $10,000 to Trustee in exchange for Trustee's release of any and 10 all further claims against King, together with Trustee's agreement 11 that the bankruptcy court could grant King relief from automatic 12 stay to pursue any insurance or bond which may cover King's claims 13 against Marlow in the State Court Action ("the Compromise").

14 Trustee's Motion for Order Approving Compromise was filed in 15 the bankruptcy court on January 12, 2010, accompanied by a 16 memorandum of points and authorities in which Trustee evaluated 17 the Compromise under the criteria in Martin v. Kane (In re A&C 18 Props.), 784 F.2d 1377, 1381 (9th Cir. 1986).

19 Marlow filed an Opposition on January 26, 2010, arguing that 20 the claim against King in the State Court Action was not complex; 21 it would not be expensive to pursue; and its value greatly 22 exceeded the amount paid by King to Trustee in the Compromise.

In 23 addition, Marlow's counsel indicated his willingness to continue 24 advocating Marlow's claim in the State Court Action on a 25 contingency basis.

26 Trustee replied to Marlow's Opposition on February 9, 2010. 27 Trustee argued that Marlow's claim in the State Court Proceeding 28 was oral, that Marlow had grossly overvalued the claim and 1 underestimated the estate's exposure to King's claims, and that it 2 would be very expensive for Trustee to prosecute the State Court 3 Action.

4 On February 11, 2010, Marlow requested that an evidentiary 5 hearing be held on Trustee's compromise motion.

6 The bankruptcy court conducted a hearing on Trustee's motion 7 on February 16, 2010; a transcript is included in the record.

8 Marlow and Trustee were represented by counsel who were heard. 9 Trustee argued in favor of the Compromise. In response to 10 the bankruptcy court's indication that it would treat the 11 Compromise also as a sale of estate assets, Trustee suggested that 12 the hearing be continued so Marlow and his attorney could 13 consider whether to submit an overbid. Hr'g Tr. 6:10-11 14 (February 16, 2010). Marlow's counsel agreed. Hr'g Tr. 6:25-7:1. 15 The court denied the request for evidentiary hearing. Hr'g Tr. 16 8:12-17.

17 Neither Marlow nor his attorney attended the continued 18 hearing on March 9, 2010. The bankruptcy court entered its order 19 approving the compromise on March 23, 2010. The order provided in 20 relevant part that the court had read and considered all of the 21 pleadings, declarations, and exhibits containing evidence 22 submitted by the parties, as well as arguments of counsel; that 23 Trustee's motion would be granted and the compromise with King 24 approved; and that King would be granted relief from stay to 25 "pursue any insurance or bond claim King may be able to recover 26 based on her cross-complaint in the State Court Case." 27 Marlow filed a timely notice of appeal on April 5, 2010.

JURISDICTION

2 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 3 §§ 1334 and 157(b)(2)(A). We have jurisdiction pursuant to 4 28 U.S.C. § 158.

5 ISSUES

6 1. Whether Marlow has standing to appeal the ...


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