Tucker v. UST-United States Trustee, Honolulu et al

Filing 23

ORDER AFFIRMING BANKRUPTCY COURT ORDERS THAT DENIED RECONSIDERATION OF UNAPPEALED ORDER APPROVING SETTLEMENT AGREEMENT re 1 Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 8/12/2014. "This court affirms the bankruptcy court' ;s order denying reconsideration of its approval of a settlement agreement and denying reconsideration of that first denial. Tucker's request for discovery to substantiate the claims she discusses in the appeal is denied. The Clerk of Court i s directed to enter judgment pursuant to this order and to close this case." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
In re:

)
)
AMANDA D. TUCKER,
)
)
Debtor,
)
_____________________________ )
AMANDA D. TUCKER
)
)
Appellant,
)
)
vs.
)
)
DANE S. FIELD, Trustee; and
)
LCP-MAUI, LLC,
)
)
Appellees.
)
)
______________________________ )

CIVIL NO. 14-00136 SOM/BMK
(Bankr. Case No. 12-02052)
ORDER AFFIRMING BANKRUPTCY
COURT ORDERS THAT DENIED
RECONSIDERATION OF UNAPPEALED
ORDER APPROVING SETTLEMENT
AGREEMENT

ORDER AFFIRMING BANKRUPTCY COURT ORDERS THAT
DENIED RECONSIDERATION OF UNAPPEALED ORDER
APPROVING SETTLEMENT AGREEMENT
I.

INTRODUCTION.
Anesthesiologist and real estate investor, Amanda D.

Tucker, filed a Chapter 7 bankruptcy.

Over Tucker’s objection,

the bankruptcy judge granted the bankruptcy trustee’s motion for
approval of a settlement agreement under which the successor to
Tucker’s mortgagee agreed to pay $100,000 into the bankruptcy
estate.

That order was not appealed.

Instead, Tucker appeals

the bankruptcy court’s denial of a motion for reconsideration of
the order, as well as the denial of a motion for reconsideration
of the denial of the first order denying reconsideration.
Because Tucker raises no argument with any merit, she fails to
demonstrate that the bankruptcy judge abused his discretion in

denying the reconsideration motions.

The court therefore affirms

those orders without holding a hearing, pursuant to Local Rule
7.2(d) (“Unless specifically required, the court, in its
discretion, may decide all matters, including motions, petitions,
and appeals, without a hearing.”).
II.

FACTUAL BACKGROUND.
Tucker is an anesthesiologist.

See ECF No. 19-4,

PageID # 1080 (representation to Bankruptcy Court).

Tucker has

at times owned a substantial amount of real estate on Maui,
Hawaii.

See ECF No. 19-8, PageID # 1146 (representing to the

state court in a foreclosure action that, “By the year 2000,
Defendant [Tucker] had acquired sixty-five different units on
Maui.”).

According to the Schedule A (Real Property) filed in

her Chapter 7 bankruptcy case, No. 12-02052, Tucker is now the
sole owner of eight properties with a combined value that her
estimate pegs at $5,454,000.

See Case No. 12-02052, ECF No. 9-1

(filed Oct. 31, 2012).
A.

Tucker’s Loans.

In December 2006, Tucker got a loan from the Bank of
Lincolnwood for $3,115,000 and a revolving credit loan of up to
$720,000.

See Promissory Note, ECF No. 19-10; Revolving Credit

Note, ECF No. 19-11.

There is no dispute that the notes were

secured by eight mortgages on her real property.

According to

allonges to the notes, they were assigned to 2010-2 SFR Venture,

2

LLC, and then to LCP-Maui, LLC.

See ECF No. 19-10, PageID No.

1181-92; ECF No. 19-11, PageID # 1194-95.

The mortgages securing

the notes were also assigned to SFR Venture, LLC, and then to
LCP-Maui, LLC.

See, e.g., Corporate Assignment of Mortgage,

filed in the State of Hawaii Bureau of Conveyances as Doc. No.
2011-183396 (Nov. 4, 2011), ECF No. 19-13; Corporate Assignment
of Mortgage, filed in the State of Hawaii Bureau of Conveyances
as Doc. No. A-47660410 (Jan. 18, 2013), ECF No. 19-14.
According to the Claims Register in her bankruptcy
case, claims have been made against Tucker by 1) LCP-Maui for
amounts owed under the notes; 2) the State of Hawaii Department
of Taxation for $22,951.17; 3) the Internal Revenue Service for
$ 3,775,477.31; and 4) American Express Bank for $302.01.

See

ECF No. 7-2, PageID #s 217-18.
The 2006 loans were a second refinancing of earlier
loans.

Clyde Engle, the former Chairman and Chief Executive

Officer of the Bank of Lincolnwood, had met Tucker on Maui and
was involved in the earlier refinancing.

See Deposition of Clyde

Engle at 6-7, ECF No. 16-3, PageID #s 405-06.

He testified that

the earlier refinancing closed on the agreed-upon terms.
8, PageID # 407.

Id. at

Tucker then got behind on her loan payments and

discussed a second refinancing with Engle, who told her not to
worry about being behind on the payments for her first
refinancing loan, as any outstanding debt would be rolled into

3

the second refinancing loan.

Id. at 17-18, PageID # 416-17.

Engle testified that he was less involved in discussions about
the second refinancing than he had been in discussions about the
earlier refinancing.

While Engle let another employee handle the

second refinancing on behalf of the bank, Engle did agree to give
Tucker a larger loan at a lower interest rate.

As it turned out,

the other employee ended up giving Tucker a loan at a higher
interest rate.

Id. at 10, PageID # 409.

Tucker complained to

Engle that she was not getting the loan she had asked for and
told him that she was under a lot of pressure.

Engle testified

at his deposition that he told her to proceed with the second
refinancing loan and that he would “fix it later.”
PageID # 410.

Id. at 11,

Thus, for purposes of the present appeal, there is

no dispute that the 2006 loan for $3,115,000 turned out not to be
the loan Tucker had discussed with Engle.

With the Bank of

Lincolnwood’s failure in 2009, Engle lost any ability to adjust
the loan.

Id.
On or about May 4, 2012, 2010 SFR Venture, LLC, filed a

complaint in state court to foreclose on the mortgages securing
the notes for Tucker’s 2006 loans from the Bank of Lincolnwood.
See ECF No. 19-31, PageID # 1456 (copy of state-court docket
sheet).

4

On October 17, 2012, Tucker filed her voluntary
Chapter 7 petition in the underlying bankruptcy case.

See ECF

No. 19-38, PageID # 1515 (copy of bankruptcy court docket sheet).
On November 29, 2012, Tucker filed a Notice of
Bankruptcy in the foreclosure proceeding in state court, causing
that proceeding to be stayed.
B.

See ECF No. 19-31, PageID # 1457.

Motion to Approve Settlement Agreement,
Stipulation to Terminate Automatic Stay, and
Resumption of State-Court Foreclosure Proceedings.

On April 24, 2013, the bankruptcy trustee filed a
motion to approve a settlement and release agreement.
No. 19-8.

See ECF

Pursuant to that agreement, LCP-Maui was to pay the

bankruptcy trustee $100,000 to settle all claims that the trustee
and the debtor’s estate may have had against LCP-Maui relating to
the loans.

See ECF No. 19-8, beginning at PageID # 1111.
Tucker opposed the motion to approve the settlement

agreement.

See ECF No. 19-16.

She argued that the Bank of

Lincolnwood had not acted in good faith in lending her money and
contended that she had rescinded her loan by notifying the FDIC.
She therefore contested the validity of the notes and the eight
mortgages.

She stated that she had no claims against the Bank of

Lincolnwood because that bank no longer existed, and that the
FDIC was the holder in due course of her loan.

She argued that

she had never intended to file a Chapter 7 bankruptcy, but

5

instead wanted to file a Chapter 11 bankruptcy, and that the
settlement was inadequate.

Id.

The trustee’s motion to approve the settlement
agreement came on for hearing before Bankruptcy Judge Robert J.
Faris.

See ECF No. 19-21.

Judge Faris orally granted the

motion, noting that the case was seven months old and that he had
“to consider not just the interest of the debtor, but also the
interest of creditors and the estate, generally.”
PageID # 1348.

Id. at 15,

He said that the standard for approving

settlements “is whether the trustee has reasonably exercised the
trustee’s business judgment and has come up with a settlement
that’s within the range of reasonableness, and it does seem to me
that this settlement qualifies.”

Id. at 16, PageID # 1349.

Judge Faris explained that he had looked “very
carefully at the facts that Dr. Tucker states about the
circumstances that led up to this loan and taking all those facts
as true, they just don’t seem . . . likely to add up to a right
of rescission.”

Id.

He noted that, even if the loan were

rescinded, that would not mean that the debt would be
extinguished.

Id.

He said that he could not figure out how that

debt would be dealt with and that, had Tucker filed a Chapter 11
rather than a Chapter 7 bankruptcy, things would not have been
any different.

Id. at 17, PageID # 1350.

6

Ultimately, Judge

Faris approved the settlement because it was within the range of
reasonableness and was in the best interest of the estate.

Id.

A written order approving the settlement was filed on
May 23, 2013.

See ECF No. 19-18.

On May 23, 2013, the automatic stay was terminated by
the bankruptcy court via an order stipulated to by the trustee of
Tucker’s bankruptcy estate and LCP-Maui, the new owner of
Tucker’s loan.

See ECF No. 19-19.

On June 10, 2013, the state court was notified of the
termination of the automatic stay.
# 1457.

See ECF No. 19-31, PageID

LCP-Maui was thereafter substituted as the plaintiff in

the state-court action.
C.

Id., PageID # 1458.

First Reconsideration Motion.

On December 19, 2013, Tucker filed a motion that sought
1) to vacate the order filed on May 23, 2013, approving the
settlement; 2) to vacate the order filed on May 23, 2013,
terminating the automatic stay; 3) to reimpose the automatic stay
so that the state court foreclosure proceedings would be
enjoined; 4) to direct a receiver appointed by the state court to
turn over monies to the bankruptcy estate; 5) to conduct further
discovery; and 6) to obtain an award of attorneys’ fees and
costs.

See ECF Nos. 19-24 and 19-25 (hereinafter,

“Reconsideration Motion”).

7

Tucker argued in the Reconsideration Motion that the
orders entered on May 23, 2013, should be vacated because LCPMaui had “lied” to Judge Faris about being the owner of Tucker’s
loan and about Tucker’s being in default under the terms of her
loan.

See ECF No. 19-25, PageID #s 1397-98.

In support of her

contention that LCP-Maui had lied to the court about owning her
loan, Tucker said that, after receiving a letter dated December
12, 2012, indicating that LCP-Maui was the “servicer” of her
loan, see ECF No. 16-2, PageID # 358 (copy of letter), she had
asked the FDIC who owned the loan.

She says that she was told in

an e-mail of August 12, 2013, from Craig Weatherwax of the FDIC,
that Turning Point Asset Management, LP, owned her loan.
No. 16-2, PageID # 361.

See ECF

No other documents have been submitted

to this court supporting the Turning Point’s supposed ownership
of Tucker’s loan.

What is before the court is evidence

conspicuously omitted by Tucker: a follow up e-mail dated August
15, 2013, three days later, in which Weatherwax corrected
himself, telling Tucker that he had previously misidentified the
owner of her loan and that the owner of her loan was actually
LCP-Maui.

See ECF No. 19-29, PageID # 1446.

Accordingly, the

sole factual predicate for her argument that LCP-Maui did not own
her loan is something the very source of that information says
was a mistake.

8

Tucker then argued in the Reconsideration Motion that,
according to Clyde Engle, the Bank of Lincolnwood’s former
Chairman and CEO, she was never in default.
statement by Engle.

She submits no such

At most, she points to Engle’s deposition

testimony that he told her not to pay her first refinancing loan,
as that debt was going to be wrapped into the second refinancing
loan that was the subject of the foreclosure proceeding in state
court.

Tucker also argued that, as a matter of law, the loan

documents were void under chapter 480 of Hawaii Revised Statutes.
Tucker also complained that the trustee should not be allowed to
waive Tucker’s defenses to the foreclosure proceeding.

See ECF

No. 19-25.
Tucker’s Reconsideration Motion was heard on January
27, 2014.

A transcript of that hearing is filed as ECF No. 16-9,

beginning at PageID # 808.

Judge Faris orally denied the motion,

stating that even if the identity of the creditor was not
properly disclosed to the court, settlement agreements are
evaluated on the basis of their benefit to the estate, which is
the same regardless of who pays the estate.
# 809.

Id. at 2, PageID

Noting that the FDIC official had corrected his mistake

about who owned the loan, Judge Faris pointed to documents
indicating that LCP-Maui was the holder of Tucker’s note.
2-3, PageID #s 809-10.

Id. at

He then identified as “new information”

submitted in support of the Reconsideration Motion the deposition

9

of Engle.

That deposition corroborated Tucker’s claim regarding

the loan process, but Judge Faris said that he had already
assumed Tucker’s version to be true.

Id. at 3, PageID # 810.

His evaluation of the settlement was therefore unchanged.
6, PageID # 813.

Id. at

To the extent Tucker was asking to conduct

discovery, Judge Faris ruled that the requested discovery would
not affect his approval of the settlement agreement.

Id.

On February 11, 2014, Judge Faris issued his written
order denying Tucker’s Reconsideration Motion.
32.

See ECF No. 19-

This appeal concerns this order.
D.

Second Reconsideration Motion.

Tucker moved for reconsideration of the court’s order
of February 11, 2014, which denied the Reconsideration Motion.
See ECF No. 19-33.

The memo in support of this motion was

confusing and sometimes relied on what Judge Faris accurately
described as “intemperate” language.

See ECF No. 19-34.

For

example, Tucker stated, “The court seems completely unaware of
the policy of the F.D.I.C. and quasi-federal agencies like Fannie
Mae and Freddie Mac to encourage the submission of false
declarations to the Court . . . .”

Id. at 4 n.2, PageID # 1473.

On May 27, 2014, Judge Faris denied the second
reconsideration motion, noting that it was “less meritorious than
the first.”

ECF No. 19-36, PageID #s 1497-98.

from this order also.

10

This appeal is

E.

The Mortgages Have Been Foreclosed on in State
Court and the Properties Have Been Sold.

At the hearing on LCP-Maui’s renewed motion for summary
judgment in the state-court foreclosure case, Tucker argued that
LCP-Maui was not the correct party and that, based on a filing
she intended to make in the bankruptcy court, the state court
should determine that there were questions of fact as to whether
LCP-Maui owned the loans.

See Transcript of Proceeding, ECF No.

16-8, beginning on PageID # 795-98.

Relying on the status of the

case before it, the state court judge orally granted the motion.
Id., PageID # 804.
On January 29, 2014, the state court filed its written
order granting LCP-Maui’s renewed motion for summary judgment and
decree of foreclosure.

See ECF No. 19-35.

The state court’s

findings of fact indicate that Tucker executed and delivered
eight separate mortgages to secure her loans from the Bank of
Lincolnwood.

Id., PageID # 1485.

The findings of fact further

state that, in 2011, the Federal Deposit Insurance Company, as
the receiver for the Bank of Lincolnwood, assigned the notes and
mortgages to 2010-2 SFR Venture, LLC, the original plaintiff in
the foreclosure proceeding.

Id., PageID # 1486.

The notes and

mortgages were then assigned to LCP-Maui, the new plaintiff in
the foreclosure proceeding.

Id.

According to the findings of

fact, Tucker failed to pay what she owed and was therefore in
default under the terms of her loan documents.
11

Id., PageID #

1487.

As of June 10, 2013, Tucker owed LCP-Maui $5,268,634.88 on

the first loan and $1,171,715.33 on the revolving loan.
PageID # 1488.

Id.,

The state court appointed a commissioner to sell

the mortgaged property, allowing LCP-Maui to credit bid for the
property.

Id., PageID # 1490-91.
The state court’s docket shows that, in June 2014, the

state court granted LCP-Maui’s motion for confirmation of
foreclosure sale and denied Tucker’s request to set aside the
summary judgment order of January 29, 2014.

See Orders of June 9

and 17, 2014.
III.

STANDARD OF REVIEW.
This court normally reviews a bankruptcy court’s

findings of fact for clear error and its conclusions of law de
novo.

See In re Kimura (United States v. Battley), 969 F.2d 806,

810 (9th Cir. 1992) (“The court reviews the bankruptcy court’s
findings of fact under the clearly erroneous standard and its
conclusions of law de novo.”).

However, a bankruptcy court’s

approval of a compromise is reviewed for abuse of discretion.
See In re Debbie Reynolds Hotel & Casino, Inc., 255 F.3d 1061,
1065 (9th Cir. 2001); In re A & C Props., 784 F.2d 1377, 1380 (9th
Cir. 1986).

This court also reviews for abuse of discretion

bankruptcy court orders denying motions for reconsideration.

In

re O’Kelley, 420 B.R. 18, 22 (D. Haw. 2009) (citing In re Weiner,
161 F.3d 1216, 1217 (9th Cir. 1998), for proposition that Ninth

12

Circuit reviews bankruptcy court orders independently of
Bankruptcy Appellate Panel’s decision, and bankruptcy court’s
denial of motion for reconsideration is reviewed for abuse of
discretion); In re Greco, 113 B.R. 658, 662 (D. Haw. 1990).
IV.

TUCKER SHOWS NO ABUSE OF DISCRETION.
Tucker did not appeal the original order of May 23,

2013, which approved the settlement agreement, or the stipulated
order lifting the automatic stay of the state court’s foreclosure
proceeding.

She instead waited more than six months to file a

motion for reconsideration of those orders to basically rehash
her old arguments.

Tucker now appeals the bankruptcy court’s

order of February 11, 2014, denying her motion for
reconsideration, as well as the order of February 27, 2014,
denying her motion for reconsideration of the denial of her first
reconsideration motion.

Because the court is reviewing denials

of motions for reconsideration of an order approving a
settlement, the court need not review those orders de novo,
contrary to Tucker’s contention.
A.

This Court Will Not Disturb the State Court’s
Finding of Fact that LCP-Maui Owned Tucker’s Loan.

Judge Faris did not abuse his discretion when he denied
the motions for reconsideration essentially repeating arguments
made in the original motion.

Even if this court reviewed de novo

Tucker’s claim that LCP-Maui did not own her loan, the only
reasonable conclusion is that LCP-Maui owned the loan.
13

Tucker’s

attempt to seize on a mistake by Weatherwax of the FDIC is
unavailing.

Relying on an e-mail that was corrected three days

later without even acknowledging the corrected e-mail is not
zealous advocacy; it is tantamount to a misrepresentation of the
record.
To the extent Tucker argues for the first time on this
appeal that LCP-Maui cannot be the owner of her loan because it
was not incorporated until December 3, 2012, see ECF No. 16-3,
PageID # 392, after the notes and mortgage were assigned to it in
October 2012, Tucker lacks standing to challenge the assignment
of her loan on that ground.

See Benoist v. U.S. Bank Nat’s

Ass’n, 2012 WL 3202180, *5 (D. Haw. Aug. 3, 2012) (discussing
numerous cases in which courts concluded that borrowers lacked
standing to challenge assignments of their loan documents, and
concluding that plaintiffs could not set aside assignments of
mortgages even when pooling and service agreement terms were not
followed); Au v. Republic State Mortg. Co., 2012 WL 3113147, *4
n.6 (D. Haw. July 31, 2012) (noting that borrowers who are not
parties to or beneficiaries of pooling and service agreements
lack standing to challenge alleged violations of such
agreements); Bank of New York Mellon v. Sakala, 2012 WL 1424655,
*5 (D. Haw. Apr. 24, 2012) (same); Abubo v. Bank of New York
Mellon, 2011 WL 6011787, *8 (D. Haw. Nov. 30, 2011) (same);
Velasco v. Security Nat'l Mortg. Co., 823 F. Supp. 2d 1061, 1067

14

(D. Haw. 2011) (ruling that borrower could not dispute validity
of assignment of loan documents through “slander of title” claim
because borrower was not party to or intended beneficiary of
assignment).
Notwithstanding Tucker’s indignant assertions to the
contrary, the only actual evidence of ownership of the loans
before this court consists of the notes and mortgages, which were
assigned by the Bank of Lincolnwood to 2010 SFR Venture, LLC, and
which in turn assigned them to LCP-Maui.

This is consistent with

the finding of fact made by the state court that LCP-Maui owned
the loan, a finding that this court treats as inviolate under the
Rooker-Feldman doctrine.

See District of Columbia Court of

Appeals v. Feldman, 460 U.S. 462, 482-86 (1983); Rooker v.
Fidelity Trust Co., 263 U.S. 413, 415-16 (1923).
A statement to Tucker that LCP-Maui was going to be
“servicing” her loan is not evidence that LCP-Maui did not own
her loans.

The letter that Tucker relies on, ECF No. 16-2,

PageID # 358, states that “you are hereby notified that the
servicing of your mortgage loan, that is the right to collect
payments from you, has been assigned, sold or transferred to LCPMaui.”

The letter is not inconsistent with LCP-Maui’s ownership

of Tucker’s loan.
The court therefore rejects Tucker’s argument that LCPMaui lacked standing to enter into the settlement agreement with

15

the bankruptcy estate’s trustee.

The court also rejects her

contention that the settlement agreement should not have been
approved because of LCP-Maui’s “fraud on the Bankruptcy Court,”
as that alleged fraud is based on the same nonobjectionable
conduct.
B.

This Court Will Not Disturb the State Court’s
Finding of Fact that Tucker Defaulted on Her
Loans.

Tucker not only challenges LCP-Maui’s status as the
owner of her loans, she also contends that she was not in default
on her loans.

Again, the state court found to the contrary.

This court must accept the state court’s finding that Tucker was
in default, as this court cannot sit as an appellate court over
that decision under the Rooker-Feldman doctrine.
Tucker’s argument that she was not in default because
Engle told her not to make payments on the first refinancing loan
is not persuasive.

Engle testified at his deposition that he

told Tucker not to make those payments because the outstanding
loan would be rolled into the second refinancing loan, which is
the loan Tucker defaulted on.

Engle did not testify that Tucker

did not have to make payments on the second refinancing loan, as
represented by Tucker in her opening brief on this appeal.

See

ECF No. 16, PageID # 259.
Engle did promise to “fix” the second loan to match the
terms he had discussed with Tucker, but did not do so because the

16

bank failed.

Given the state court’s determination that Tucker

defaulted on the terms of her loans, Tucker cannot now rely on
this court to undo the state court’s decision to enforce the loan
agreements.

Although Tucker had not deposed Engle before the

state court ruled that she had defaulted on her loans, she
clearly could have presented the pertinent circumstances to the
state court because she herself was present as those
circumstances unfolded.

In fact, Tucker had already argued to

the state court with respect to an earlier motion for summary
judgment that the court should not allow foreclosure because the
bank had given her a loan that was not what had been agreed to
and she had signed the loan documents only because she felt that
she had to.

Tucker had argued that the bank’s conduct was unfair

and deceptive, violated chapter 480 of Hawaii Revised Statutes,
and rendered the loan unenforceable.
1148-49, 1151-52.

See ECF No. 19-8, PageID #s

Although her opposition to LCP-Maui’s motion

for summary judgment is not before this court, she either made
the same argument there or waived it.
Tucker is incorrect in stating that Engle and Judge
Faris “have admitted that she was not in default.”
PageID # 263.

ECF No. 16,

No facts have been submitted to this court

supporting that statement.

Moreover, Tucker has submitted no

evidence indicating that the state court refused to consider her
defenses (e.g., her argument that the loan was void ab initio

17

because it violated chapter 480 of Hawaii Revised Statutes)
before granting summary judgment in favor of LCP-Maui and
allowing it to foreclose on the mortgage and before confirming
the sale of the foreclosed property.

If Tucker presented matters

to the state court and the state court rejected her arguments,
that is not a refusal to consider defenses.
C.

The Bankruptcy Court Did not Resolve or Terminate
Tucker’s Individual Defenses to the State Court
Foreclosure Proceeding.

Tucker says that the bankruptcy court improperly
terminated her ability to assert defenses in the state court
foreclosure proceedings.
record.

That contention is belied by the

The settlement agreement states that, in return for the

payment of $100,000 by LCP-Maui, the claims of the trustee and
Tucker’s bankruptcy estate were settled: “The claims of Trustee
settled herein include all claims, defenses and causes of action
of the Trustee and Debtor’s Estate against the Lender, regardless
of whether or not such claims, defenses and causes of action have
been asserted by the Trustee or Debtor’s Estate . . . .”
No. 19-8, PageID # 1116.

See ECF

The settlement agreement does not

18

address Tucker’s individual defenses to the state court
foreclosure proceeding.
D.

The Bankruptcy Court Did not Abuse its Discretion
in Refusing to Reconsider its Earlier Decision
that the Settlement Agreement Was in the Best
Interest of the Estate.

Tucker confusingly argues that the settlement agreement
was not in the best interest of her bankruptcy estate because she
“in effect was the entire Estate, her only other and relatively
minor creditor being the State of Hawaii Department of Taxation.”
See ECF No. 16, PageID # 253.

The Claims Register filed in the

bankruptcy case indicates that the Internal Revenue Service was
making a claim against her estate of $ 3,775,477.31.

See ECF No.

7-2, PageID #s 217-18.
The bankruptcy court did not abuse its discretion in
refusing to reconsider its decision to approve the settlement
agreement.

Nor did it abuse its discretion when it approved the

settlement agreement because the compromise was fair and
equitable.

See In re A & C Props., 784 F.2d 1377, 1380, 1381

(9th Cir. 1986) (a court may approve compromise agreement that is
fair, reasonable, and adequate).

In determining whether a

settlement agreement is fair, reasonable, and adequate, the
bankruptcy court considers:
(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
19

delay necessarily attending it; (d) the
paramount interest of the creditors and a
proper deference to their reasonable views in
the premises.
U.S. v. Edwards, 595 F.3d 1004, 1012 (9th Cir. 2010) (quoting In
re A & C Props., 784 F.2d at 1380-81)).
At the May 22, 2013, hearing concerning the motion to
approve the settlement agreement, Judge Faris stated that he had
looked carefully at the facts and circumstances and noted that
they “don’t seem . . . likely to add up to a right of
rescission.”

ECF No. 19-21, PageID # 1349.

He may have been

referring to the D’Oench, Duhme doctrine, which “protects the
FDIC from unwritten agreements that relieve a debtor of the
obligation to pay a facially unconditional note.”

FDIC v. Craft,

157 F.3d 697, 705 (9th Cir. 1998); but see Ledo Fin. Corp. v.
Summers, 122 F.3d 825, 829 (9th Cir. 1997) (refusing to apply
D’Oench, Duhme doctrine when FDIC is receiver for bank, as FDIC
is standing in shoes of insolvent bank).

More likely, Judge

Faris was referring to Tucker’s claim that the loan was void ab
initio under chapter 480 of Hawaii Revised Statutes.

Judge Faris

noted that Tucker would still owe the money that she had received
from the loans even if the loans were rescinded, and Judge Faris
could not figure out how to deal with that debt.

Id., PageID

# 1350.
Under chapter 480, a mortgagor can seek to have his or
her mortgage documents declared void pursuant to section 480-12,
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but a successful mortgagor will have to place the parties in a
position close to the position they held prior to the mortgage
transaction.

See Au v. Republic St. Mort. Co., 948 F. Supp. 2d

1086, 1099 (D. Haw. 2013); Young v. Bank of N.Y. Mellon, 848 F.
Supp. 2d 1182, 1193-94 (D. Haw. 2012); Beazie v. Amerifund Fin.,
Inc., 2011 WL 2457725 (D. Haw. June 16, 2011).

Upon the closing

of the loans, Tucker received loan proceeds from the bank.

To

avoid a windfall to her, she would need to pay back those loan
proceeds if her loans were rescinded.

Tucker never even

acknowledged this obligation in proceedings before Judge Faris.
Judge Faris further noted that the bankruptcy case was
seven months old and that he had “to consider not just the
interest of the debtor, but also the interests of creditors and
the estates.”

Id., PageID # 1348.

He stated that the trustee,

in entering into the settlement agreement, was using his
reasonable “business judgment.”

Id., PageID # 1349.

The payment

of $100,000 from the lender into the bankruptcy estate would
provide some money to pay Tucker’s creditors.
allow the foreclosure proceeding to go forward.

It would also
Once the Chapter

7 bankruptcy proceeding was completed, the lender could not seek
a deficiency judgment against Tucker in connection with the
foreclosure.

Under these circumstances, this court finds no

abuse of discretion in Judge Faris’s approval of the settlement.

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V.

CONCLUSION.
This court affirms the bankruptcy court’s order denying

reconsideration of its approval of a settlement agreement and
denying reconsideration of that first denial.

Tucker’s request

for discovery to substantiate the claims she discusses in the
appeal is denied.

The Clerk of Court is directed to enter

judgment pursuant to this order and to close this case.

IT IS SO ORDERED.
DATED: Honolulu, Hawaii, August 12, 2014.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

In re: Amanda D. Tucker, Civ. No. 14-00136 SOM/BMK; ORDER AFFIRMING BANKRUPTCY COURT
ORDERS THAT DENIED RECONSIDERATION OF UNAPPEALED ORDER APPROVING SETTLEMENT AGREEMENT

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