Opinion
No. 03-11241-WCH, Adversary Proc. No. 03-1193.
January 25, 2007
MEMORANDUM OF DECISION REGARDING JOINT MOTION FOR APPROVAL OF COMPROMISE, VACATING TRIAL ASSIGNMENT, AND SCHEDULING FURTHER PRE-TRIAL CONFERENCE
I. Background
Stephen Gordon (the "Plaintiff") brought this adversary proceeding seeking to have Gary R. Streck's (the "Debtor") discharge denied on the basis of various subsections of 11 U.S.C. § 727. The case has been extremely contentious and more than slightly uncivil. The parties have moved the Court to settle the case. For the reasons set forth below, I will enter an order denying the motion.
By prior orders of the court, the matter was scheduled for trial on January 30, 2007. Docket No. 139. In a joint pre-trial order, the parties were directed to file a joint pretrial statement by January 23, 2007. Id. I also assigned for January 30, 2007, a hearing on the pending motion of the Plaintiff to disqualify counsel for the Debtor. Docket No. 128.
The parties did not file a joint pretrial statement and instead proffered a Joint Motion for Approval of Compromise (the "Motion"). Docket No. 145. The essence of the Motion is that Debtor agrees to pay the Plaintiff $500.00 and deliver a note to Plaintiff in the amount of $14,500, which his non-debtor spouse will co-sign. The Motion was scheduled for hearing on January 31, 2007. After having reviewed the Motion and the travel of this case, however, I issue this decision in lieu of holding a hearing.
II. Analysis
I agree with the majority view that an adversary proceed ng seeking denial of discharge under § 727 can be settled. See, e.g., In re Sheffer, 350 B.R. 402, 406 (Bankr. W.D. Ky. 2006). In order to make that determination, I will adopt the standards set out in Judge Brown's decision, Wolinsky v. Maynard (In re Maynard), 273 B.R. 369 (Bankr D. Vt. 20002). In applying those factors, I conclude that the proposed settlement does not satisfy the last factor, "that principles of equity and fairness would be furthered by approval of the proposed settlement," Id. at 372. I so hold because all of the consideration being paid by Debtor (and his spouse) goes directly to Plaintiff and not to the estate. This holding is consistent with those cases which hold that a settlement is not in the best interests of the estate when it results in the creditor receiving benefits for himself, rather than a benefit for the estate. Bankruptcy Receivables Mgmt. v. de Armond (In re de Armond), 240 B.R. 51, 56 (Bankr. C.D. Cal. 1999); In re Bates, 211 B.R. 338, 345 (Bankr. D. Minn. 1997); Tindall v. Mavrode (In re Mavrode), 205 B.R. 716, 721 (Bankr. D. N.J. 1997).
III. Conclusion
For the reasons set forth herein, I will enter an order denying the Motion. As the parties have not timely filed a joint pretrial statement, I will also order that the trial assignment for January 30, 2007 be vacated and will continue the motion to disqualify generally, to be reassigned to the calendar at the next pretrial conference.