Opinion
Case No. 8:19-bk-5683-MGW Case No. 8:20-cv-2458-T-KKM
2021-06-03
IN RE: Michael William KENNY Michael William Kenny, Appellant, v. Critical Intervention Services Inc., Appellee.
Jonathan Edgar Pollard, Christopher S. Prater, Pollard PLLC, Ft. Lauderdale, FL, for Appellant. Allison D. Thompson, The Solomon Law Group, P.A., Tampa, FL, for Appellee.
Jonathan Edgar Pollard, Christopher S. Prater, Pollard PLLC, Ft. Lauderdale, FL, for Appellant.
Allison D. Thompson, The Solomon Law Group, P.A., Tampa, FL, for Appellee.
ORDER
Kathryn Kimball Mizelle, United States District Judge
Michael Kenny, the debtor in the underlying bankruptcy case, appeals an order from the bankruptcy court that (1) approved the Trustee's settlement with Critical Intervention Services (CIS), a creditor of the estate, and (2) overruled Kenny's objection to CIs's proof of claim. Kenny also appeals the bankruptcy court's order denying his motion to reconsider the order approving the Trustee's settlement.
After reviewing the record, the parties' briefs, and applicable law, and with the benefit of oral argument, the Court determines that the bankruptcy court did not abuse its discretion when it approved the Trustee's settlement with CIS and, subsumed within that ruling, overruled Kenny's objection to CIs's proof of claim. Nor did the bankruptcy court abuse its discretion when it denied Kenny's motion to reconsider the order approving the Trustee's settlement. Therefore, the Court affirms both orders.
I. Background
Kenny worked for CIS as a security guard. As part of his employment with CIS, Kenny signed a Non-Competition, Non-Solicitation, and Confidentiality Agreement (restrictive covenants). Most relevant to this appeal, the restrictive covenants prevented Kenny from working for a CIS competitor, soliciting CIS clients, and divulging confidential CIS information.
Kenny left his job at CIS after less than a month. Shortly afterwards, Kenny began working for Securitas, a CIS competitor, as a security guard. After learning about Kenny's new position, CIS sent Securitas a letter notifying it that Kenny was in breach of his restrictive covenants with CIS. Securitas then terminated Kenny.
This series of events prompted Kenny to sue CIS in state court seeking a declaratory judgment that the restrictive covenants he signed with CIS were unenforceable and money damages based on tortious interference due to CIs's actions giving rise to his termination. CIS filed a counterclaim alleging breach of contract and seeking monetary and injunctive relief based on Kenny's restrictive covenants.
CIS eventually moved to disqualify Kenny's counsel Jonathan Pollard (who also represents Kenny here in the bankruptcy proceedings). Before the state court could rule on that motion, Kenny filed for individual Chapter 7 bankruptcy. (Doc. 8-10). He recorded his total liabilities as $333,898—the overwhelming majority of which constituted nonpriority unsecured claims. (Id. at 9). Kenny listed CIS as a nonpriority creditor, specified that the type of nonpriority unsecured claim was "pending lawsuit," and checked boxes indicating that CIs's claim was contingent and disputed. (Id. at 19).
CIS timely filed a proof of claim for $302,305.26. (Doc. 8-8). As the basis for its claim, CIS stated: "Attorney's fees and costs incurred-Sixth Judicial Circuit 17-004512" (i.e., the state-court action between Kenny and CIS). (Id. at 2). Kenny objected. (Doc. 8-36). According to Kenny, the proof of claim was meritless because CIS could not prevail in the state-court action against Kenny. (Id. at 2–3).
While Kenny's objection remained pending, the bankruptcy Trustee entered into a settlement agreement with CIS. (Doc. 8-37). As part of that agreement, CIS agreed to pay the estate $30,000 in exchange for dismissing the state-court action with prejudice. In exchange, CIS would receive an allowed claim for $302,305.26 subordinated to all other unsecured claims and would assign 33% of its received dividend (up to $10,000) from the bankruptcy proceeding to Kenny. (Id. at 7).
The Trustee presented the settlement agreement to the bankruptcy court for approval under Federal Rule of Bankruptcy Procedure 9019(a). No creditor objected to the Trustee's proposed agreement. But Kenny did. He argued that that he would obtain a much larger award if Pollard continued to litigate the case to final judgment in state court and thus $30,000 was too low.
The bankruptcy court held a hearing on the Trustee's proposed settlement. (Doc. 8-76). After discussing the factual background of the case, the court analyzed the proposed settlement under the relevant factors laid out by In re Justice Oaks II, Ltd. , 898 F.2d 1544 (11th Cir. 1990). It found that "each of the Justice Oaks factors weighs in favor of approving the compromise" and approved the settlement. As part of its ruling, the bankruptcy court ruled that Kenny's objection to CIs's proof of claim was "subsumed in the settlement" and overruled Kenny's objection. (Doc. 8-76 at 14–15).
After the bankruptcy court entered a written order memorializing the oral ruling (Doc. 8-72), Kenny filed a motion for reconsideration, which the bankruptcy court denied. (Doc. 8-91). This appeal followed.
II. Standard of Review
In his briefings and at oral argument, Kenny focused on the proper standard of review on appeal. According to Kenny, the Court should review de novo the bankruptcy court's decision to overrule Kenny's objection to CIs's proof of claim as part of the Trustee's settlement. For support, Kenny cites two unpublished Eleventh Circuit decisions: In re Walston , 606 F. App'x 543 (11th Cir. 2015) and In re Raymond & Assocs. , 841 F. App'x 138 (11th Cir. 2020).
Kenny also cited In re Optical Technologies Inc. , 425 F.3d 1294 (11th Cir. 2005). Although that case states that the bankruptcy court's legal conclusions are reviewed de novo, id. at 1303, it is otherwise inapposite. See id. at 1296–1308 (discussing notice requirements in Chapter 11 bankruptcy and reorganization plan in Chapter 11).
Kenny is correct in that those cases hold that a bankruptcy court's legal conclusions are reviewed de novo and its factual findings are reviewed for clear error. In re Walston , 606 F. App'x at 545 ; In re Raymond & Assocs. , 841 F. App'x at 140. But the bankruptcy court made no legal conclusions or factual findings regarding Kenny's objection to CIs's proof of claim. Nor did the bankruptcy court decide the merits of the claims between Kenny and CIS in the state-court action. Rather, the bankruptcy court concluded that Kenny's objection to the proof of claim was "subsumed" in the Trustee's settlement with CIS and so overruled Kenny's objection as part of the decision to approve the settlement. (Doc. 8-76 at 14–15). That was not a merits determination on the objection to the proof of claim; thus, there is no legal conclusion to review de novo.
Resolving an objection to a proof of claim by approving a settlement that involves that objection is within the bankruptcy court's authority. See In re Mouzon Enters. Inc. , 610 F.3d 1329, 1334 (11th Cir. 2010) (discussing how an order resolving an objected claim may be entered following a settlement between the parties). Importantly, a bankruptcy court's order approving a settlement "does not constitute a final decision on the merits. " In re Justice Oaks , 898 F.2d at 1549 (emphasis added). If the bankruptcy court adjudicated the objection to the proof of claim by deciding the merits of the underlying state-court litigation, this Court agrees that it must review that legal conclusion de novo. But because it did not do so, Kenny's argument about the appropriate standard of review fails.
When there has been no determination on the merits of an objection to a proof of claim, the bankruptcy court's decision to allow a proof of claim as part of a settlement is reviewed for abuse of discretion. See Carnegia v. Ga. Higher Educ. Assist. Corp. , 691 F.2d 482, 483 (11th Cir. 1982) ("[W]e cannot say that the bankruptcy court abused its discretion in allowing the [proof of] claim."); see also Alegion Inc. v. Cent. States, Se. and Sw. Areas Pension Fund , No. 2:19-CV-00218-ALB, 2019 WL 4145525, at *3 (N.D. Ala. Aug. 30, 2019) (Brasher, J.) ("[A] district court generally reviews a bankruptcy court's decision to allow a claim for an abuse of discretion."); In re Chira , 378 B.R. 698, 708 (S.D. Fla. 2007) (Altonaga, J.) ("A bankruptcy court's decision to allow or disallow a claim is reviewed under the abuse of discretion standard."), aff'd 567 F.3d 1307 (11th Cir. 2009). As a result, this Court will review for an abuse of discretion the bankruptcy court's decision to allow CIs's proof of claim as part of the Trustee's settlement.
Because the bankruptcy court did not decide the merits of the state-court action between Kenny and CIS (something the bankruptcy court need not do as discussed above), Kenny's extended argument about the merits of his state-court action is misplaced. That said, whether CIS can prove a legitimate business interest under Section 542.335, Florida Statutes, affects the first Justice Oaks factor: the probability of success in the litigation. The Court will thus address Kenny's arguments about the merits of the state-court claim within that context.
Similarly, the bankruptcy court's approval of a settlement agreement is reviewed for abuse of discretion. In re Chira , 567 F.3d 1307, 1311 (11th Cir. 2009). The abuse-of-discretion standard of review is "extremely limited" and "highly deferential." Aldana v. Del Monte Fresh Produce N.A. Inc. , 578 F.3d 1283, 1288 (11th Cir. 2009) (citation omitted). This means that a bankruptcy court's approval of a settlement agreement must be affirmed unless the court's decision is (1) completely devoid of minimum evidentiary support or (2) bears no rational relationship to the evidence. In re Gaddy , No. 17-01568, 2020 WL 6065177, at *2 (Bankr. S.D. Ala. May 7, 2020), aff'd 851 Fed.Appx. 996 (11th Cir. 2021).
III. Analysis
Federal Rule of Bankruptcy Procedure 9019(a) gives the bankruptcy court the authority to approve a compromise or settlement. The bankruptcy court must consider the following four factors when exercising that authority:
(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 the premises.
In re Justice Oaks , 898 F.2d at 1549.
In approving a settlement, the bankruptcy court must consider many factors other than the merits of the underlying litigation that forms the basis for a proof of claim. See id. In fact, the bankruptcy court need not decide the merits of the claims at all—only the probability of succeeding on those claims. Id. A fortiori, it also need not decide whether to approve a settlement based on a resolution of ultimate facts at issue in the underlying litigation. In re Morgan , No. 10-60373-CIV-MORENO, 2011 WL 13185742, at *4 (S.D. Fla. Feb. 15, 2011) (Moreno, J.), aff'd 439 F. App'x 795 (11th Cir. 2011). Instead, the bankruptcy court must make a pragmatic decision based on all equitable factors. In re Morgan , 2011 WL 13185742, at *4.
A. Justice Oaks Factors
1. Probability of Success in the Litigation
The bankruptcy court concluded that the "probability of success" of the underlying lawsuit weighed in favor of approving settlement. In weighing the likelihood of success, it considered that CIS had enforced two previous non-compete agreements against former employees and any potential award higher than $10,000 in economic damages (what the settlement agreement provided for Kenny) was speculative. This determination was not an abuse of discretion.
Kenny contends he almost certainly would have succeeded on the underlying state claims. Specifically, he argues that CIS cannot prove the existence of a legitimate business practice under Section 542.335, Florida Statutes, to prevail in the state-court action on the restrictive covenants (a necessary element under state law to be an enforceable covenant). According to him, CIs's business information at issue is not confidential as required by Section 542.335 ; he received no specialized or extraordinary training that Section 542.335 protects; and he never interfered with substantial customer relationships protected by Section 542.335.
Kenny also argues that, even if a legitimate business interest exists, CIS cannot prove damages because Kenny had nothing to do with CIs's only possible harm: CIS losing a security contract at an Achieva location where Kenny worked. Most significantly, he argues that—if successful—he would receive punitive damages and substantial attorney's fees and costs.
The Trustee responds that probability of success in litigation is always uncertain. He points out that a motion to disqualify Pollard (who Kenny argued was the only competent counsel to represent him in that action) remained pending before the state court. The Trustee argues that, if that motion is granted, then Kenny's chances at success decrease significantly—a point Kenny conceded at oral argument. And, under the settlement, CIS will pay three times more than Kenny's total possible economic damages if successful in the state court action.
To be sure, Kenny demonstrates that he has at least some chance of succeeding in state court against CIS. In fact, the bankruptcy court recognized that Kenny's arguments were not without merit. See (Doc. 8-76 at 10) ("To be fair, [Kenny] bases a number of arguments that call into question the enforceability of a non-compete."); see also (Doc. 8-91 at 14) ("[F]rankly, I question the tactical move of filing a bankruptcy."). In so doing, that court carefully considered Kenny's arguments about the merits of his state-court action.
But the bankruptcy court also properly considered that CIS obtained two state-court orders enforcing similar non-compete agreements. And the bankruptcy court acknowledged that, even if Kenny prevailed on that claim, he would not have obtained an economic-damages award higher than $10,000—another point Kenny conceded at oral argument. The bankruptcy court also recognized that Kenny could receive a punitive-damages award if he prevailed on his tortious-interference claim in state court. But it found more persuasive that CIS sought to enforce a "facially valid non-compete" agreement that it has successfully (twice, in fact) enforced against other former employees. As a result, the bankruptcy court considered CIs's recent success in enforcing non-compete provisions and its agreement to pay the estate $20,000 more than it would had Kenny prevailed in the state-court action more substantial in evaluating the probability of success factor.
Kenny retorts that if he prevailed on the declaratory action, he would "necessarily" win on the tortious-interference claim. Prevailing on that second claim, according to him, would result in high punitive damages, attorney's fees, and costs. This conclusion is speculative. Contrary to Kenny's argument, nothing guarantees he will prevail on the tortious-interference claim even if his chances increase if he succeeded on the restrictive-covenant claim. More still, nothing guarantees that he will obtain punitive damages—let alone a high amount of punitive damages. And any award for attorney's fees—which itself is dependent on Kenny's speculative success—would be subject to possible reduction by the state court. See Fla. Patient's Comp. Fund v. Rowe , 472 So. 2d 1145, 1146 (Fla. 1985) (adopting the federal lodestar approach computing reasonable attorney's fees). Given the above, the bankruptcy court did not abuse its discretion in finding that Kenny's hopes of a big "payday" were speculative.
At bottom, Kenny argues that the bankruptcy court should have decided the merits of the underlying litigation involving the restrictive covenants. See (Doc. 10 at 9). But the bankruptcy court had no duty to do so. See In re Justice Oaks , 898 F.2d at 1549. Instead, it had to conclude only that the settlement did not "fall below the lowest point in the range of reasonableness." See In re Martin , 490 F.3d 1272, 1275 (11th Cir. 2007). To do so, the bankruptcy judge had to only canvass the issues. See Romagosa v. Thomas , No. 6:06-CV-301-ORL-19JGG, 2006 WL 2085461, at *5 (M.D. Fla. July 25, 2006) (Fawsett, J.), aff'd 236 F. App'x 498 (11th Cir. 2007). Given the contingent nature of Kenny's state-court claims and potential recovery, the bankruptcy court did not abuse its discretion when concluding the probability of success favored settlement.
2. The Difficulties in Collection
The bankruptcy court found it "unclear whether [Kenny] has the ability to collect from CIS." (Doc. 8-76 at 12). Even if Kenny could collect, the bankruptcy court agreed with the Trustee that "the ability to obtain a judgment against CIS and then collect on the judgment necessarily involves delay." (Id. ). So the bankruptcy court weighed this factor in favor of settlement.
Kenny argues that there are no known difficulties with collecting a judgment from CIS and that neither the Trustee nor the bankruptcy court concluded that Kenny would have difficulty collecting from CIS. According to Kenny, efficiency in having funds available now is "not enough to eschew equity" because collecting a settlement is always faster than collecting a judgment.
The Trustee defends that "[c]ollection necessarily entails delay and expense." (Doc. 13 at 22). And that the bankruptcy court did not abuse its discretion in finding that an immediate and certain settlement now outweighs the benefits of a potentially larger judgment later that would need to be collected.
The "difficulties in collection" factor is not dispositive on whether a settlement is reasonable. See In re Gaddy, 851 Fed.Appx. at 996, 1001 (affirming settlement where bankruptcy court considered difficulty in collection but found it irrelevant or neutral because collection difficulties were not at issue); see also In re Able Body Temp. Servs. Inc. , 8:14-CV-1631-T-23, 2015 WL 791281, at *4 (M.D. Fla. Feb. 25, 2015) (Merryday, J.) (affirming settlement where difficulty in collection "played an insignificant role in the bankruptcy court's analysis"), aff'd 632 F. App'x 602 (11th Cir. 2016). In fact, the bankruptcy court's awareness of the Justice Oaks principles, including difficulty in collecting, is enough to show that the bankruptcy court did not rubberstamp the Trustee's proposal but exercised proper discretion. See In re Morgan , 2011 WL 13185742, at *5. The bankruptcy court did not abuse his discretion when finding that the "difficulty in collection" factor weighed in favor of settlement. It properly considered this factor and found that it unclear whether Kenny had the ability to collect from CIS. Even if Kenny had that ability, the bankruptcy judge found that an immediate payment now outweighed possible collection of a larger settlement later. This conclusion was not an abuse of discretion.
3. Complexity of Litigation
The bankruptcy court found that the state-court litigation between Kenny and CIS is complex, particularly because non-compete litigation is a "highly specialized area." (Doc. 8-76 at 12). And the bankruptcy court accepted Kenny's assertion that his current counsel, Pollard, is the only attorney who can adequately represent him there. (Id. ). So the bankruptcy court concluded that the possibility of Kenny losing his only adequate representation in a specialized area of the law weighed in favor of settlement. There was no abuse of discretion in finding that the "complexity of litigation" factor weighed in favor of settlement.
Kenny rejoins that the state-court litigation is not complex and the case is ready for trial. According to him, the motion to disqualify Pollard is a "delay tactic" (although, notably, Kenny never opines on the likelihood that the motion will be granted). (Doc. 10 at 26). Kenny argues that if the bankruptcy court would have denied CIs's claim then that would have resulted in him "necessarily" prevailing on the declaratory action and counterclaim. (Id. ). Thus, any complexity of the legal issues would dissipate, and the state court would have to resolve only the "straightforward" tortious-interference claim. (Id. at 27).
The Trustee argues that the bankruptcy court properly found that the non-compete litigation is complex. The Trustee relies on Kenny's own representation that only Pollard could adequately represent him. If the motion to disqualify Pollard is granted, the Trustee contends that, by Kenny's own admission, he would be without adequate representation for a complex non-compete case. The Trustee argues that his decision to avoid that risk by settling with CIS weighed in favor of settlement.
The possibility of costly and protracted litigation supports approving a proposed settlement. In re Chira , 567 F.3d at 1313 ; In re Gaddy, 851 Fed.Appx. at 1002 ; see also In re Able Body Temp. Servs. , 2015 WL 791281, at *4 (affirming order approving settlement where the bankruptcy court emphasized how long the issues have been litigated). Clearly, the bankruptcy court's determination that the complexity of the litigation weighed in favor of settlement was not an abuse of discretion.
4. Interest of Creditors
The bankruptcy court ruled that the interests of the creditors clearly supported settlement: "Notably, no creditor has objected to the proposed compromise nor would the Court expect them to" since the "settlement proceeds should be enough to pay administrative expenses and general unsecured creditors other than CIS in full and provide a distribution to the Debtor." (Doc. 8-76 at 13). What is more, the Trustee pointed out at oral argument that CIs's allowed claim of $302,305.26 will be subordinated to all other unsecured claims, which means that all other unsecured claims will be paid before CIS receives funds. This factor undisputedly favors settlement, so the bankruptcy court did not abuse its discretion when so concluding.
Kenny argues that the settlement is not in the best interest of the creditors. He arrives at this unusual position by discounting CIS as a proper creditor. He contends that the creditors will be made whole if the bankruptcy court had denied CIs's proof of claim. Then, after Kenny receives a resulting "influx of fees" from his state litigation, he could fund the estate to pay the other creditors and administrative fees. In reality, this argument is a resuscitation of Kenny's primary argument that CIS has no valid proof of claim because its underlying lawsuit is meritless and therefore is not a proper creditor at all.
The Trustee argues that the settlement is a "guaranteed recovery for the Debtor's state that will pay administrative claims, general unsecured claims, and generate significant payment to the Debtor." (Doc. 13 at 24). Unsurprisingly, no creditor objected to the settlement, and the Trustee believes that the settlement is in the creditors' best interest.
If a settlement will pay creditors in full, then approving the settlement is in the best interest of the creditors. In re Chira , 567 F.3d at 1313. And the lack of an objection from any creditor weighs in favor of finding that the settlement is in the creditors' best interest. See In re Able Body Temp. Servs. , 2015 WL 791281, at *4 (affirming bankruptcy court's approval of settlement where only one creditor objected). The bankruptcy court recognized this to be true and did not abuse its discretion in finding this factor weighed in favor of settlement.
Moreover, the bankruptcy court well understood Kenny's deeper struggle with the settlement: "[He had] to give up control of [his] nonexempt assets to get a discharge" and that included the "right to any windfall" from the state litigation. (Doc. 8-76 at 13). At bottom, the "settlement is potentially a bad deal for only one interested party. The Debtor." (Id. ). But as the bankruptcy court understood, debtors are aware of forgoing potential profits to gain the benefit of a discharge of debt.
B. Allowed Claim
As discussed earlier, Kenny argues that the bankruptcy court erred by not sustaining his objection to CIs's proof of claim. But because the bankruptcy judge did not abuse his discretion when he approved the Trustee's settlement with CIS, he did not abuse his discretion in overruling Kenny's objection to CIs's proof of claim as part of the settlement. See In re Mouzon Enter. Inc. , 610 F.3d at 1333–34.
C. Motion for Reconsideration
Kenny argues that the bankruptcy court abused its discretion when it denied Kenny's motion for reconsideration. According to Kenny, the bankruptcy court's decision to find that Kenny's objection to CIs's claim was subsumed in the settlement was "analytically backwards." (Doc. 10 at 29). Kenny also contends that he provided information to the bankruptcy court that the state-court orders it cited in the original ruling were consent orders that CIS drafted, not merit determinations. And Kenny argues that the bankruptcy court "again refused to address whether Kenny's objection to CIs's proof of claim should be sustained." (Id. at 31). Kenny concludes: "The bankruptcy court abused its discretion by substituting the law of Florida and this circuit in favor of two state court agreed orders drafted by private parties and consented to as a means of dispute resolution." (Id. ).
The Trustee does not directly address the motion for reconsideration in his brief. See (Doc. 13). In the bankruptcy hearing on the motion, CIS and the Trustee argued Kenny failed to meet to standard for obtaining reconsideration. (Doc. 8-91 at 8–13). The bankruptcy court's decision to deny a motion for reconsideration is reviewed for abuse of discretion. See In re Farris , 330 F. App'x 833, 835 (11th Cir. 2009) (stating that Federal Rule of Bankruptcy Procedure 9024 incorporates Federal Rule of Civil Procedure 60(b) ). Most relevant here, a bankruptcy court may relieve a party from an earlier order for fraud, misrepresentation, or misconduct by an opposing party and "for any other reason that justifies relief." Fed. R. Civ. P. 60(b)(3) & (6) ; see (Doc. 8-75 at 3) (arguing that reconsideration was proper under Rules 60(b)(3) and 60(b)(6) ).
To obtain relief from an earlier order under Rule 60(b)(3), the movant must prove by clear and convincing evidence that the other party obtained the order through fraud, misrepresentations, or other misconduct. Waddell v. Hendry Cnty. Sheriff's Off. , 329 F.3d 1300, 1309 (11th Cir. 2003). Meanwhile, relief under Rule 60(b)(6) is an "extraordinary remedy which may be invoked only upon a showing of exceptional circumstances." Griffin v. Swim-Tech Corp. , 722 F.2d 677, 680 (11th Cir. 1984). The party moving for reconsideration under Rule 60(b)(6) must show that if the motion is not granted then "an ‘extreme’ and ‘unexpected’ hardship will result." Id.
At the hearing on the motion for reconsideration, Kenny emphasized that the two state-court orders upon which the bankruptcy court relied were not written by the state-court judges in those cases but by CIS. (Doc. 8-91 at 5). Kenny argued that the state-court orders "read like promotional and marketing pieces for CIS." (Id. at 6). Thus, he argued that these consent orders are "not valid pronouncements of Florida law regarding non-compete agreements." (Id. ). Kenny also repeated his argument that CIS is not a proper creditor and that the bankruptcy court should first rule on and deny CIs's proof of claim. (Id. at 6–7).
The bankruptcy court denied Kenny's motion for reconsideration because it found that the settlement "did not fall below the lowest point in the range of reasonableness." (Id. at 15–16). Quite the opposite, it fully funded all unsecured creditors. (Id. ). The court noted that "this is somewhat of a classic case where a debtor files for bankruptcy and then is surprised that he or she has lost control over the settlement of litigation." (Id. at 14). The court also questioned the "tactical move" of filing for bankruptcy and stated that the Trustee has the duty to administer the estate with the creditors and their interests and "often does settle these cases over the objection of the debtor that may have aspirations of a pay day." (Id. ).
The bankruptcy court did not abuse his discretion when denying Kenny's motion for reconsideration. Besides arguing that CIS crafted the state-court orders in a way that made the orders read like "promotional materials," Kenny put forth no argument—let alone clear and convincing evidence—that he is entitled to relief from the approval of the settlement agreement. Instead, consistent with the bankruptcy court's findings, Kenny will receive a settlement amount equal to the maximum amount of economic damages he could recover if he were successful in state court. And all of his unsecured creditors will be covered by the settlement. Therefore, the Court affirms the bankruptcy court's order denying Kenny's motion for reconsideration.
IV. Conclusion
The bankruptcy court did not abuse his discretion when it (1) approved the Trustee's settlement with CIS, (2) overruled Kenny's objection to CIs's proof of claim as part of the settlement, and (3) denied Kenny's motion for reconsideration. As a result, the Court AFFIRMS the bankruptcy court's order dated August 4, 2020 (Doc. 8-72), and the bankruptcy court's order dated October 2, 2020 (Doc. 8-88). The Clerk is directed to terminate any pending motions and deadlines and to close this case.
ORDERED in Tampa, Florida, on June 3, 2021.