Menu    7 ABR 486 

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

 

In re)

 )         Case No. A03-0192 CV(RRB)
VALDEZ FISHERIES DEVELOPMENT)
ASSOCIATION, INC.)
 )
Debtor             )


)         MEMORANDUM DECISION

 )
SEA HAWK SEAFOODS, INC.)
 )
Appellant             )
 )         On Appeal From
vs.                                      )         United States Bankruptcy Court
 )         District of Alaska
STATE OF ALASKA)         Hon. Donald MacDonald IV, Judge
 )         Adv. No. 02-90068
Appellee                  )

)


          Sea Hawk Seafoods, Inc (hereinafter “Sea Hawk”) has appealed to this court from the Stipulated Final Order entered by the bankruptcy court on August 12, 2003. The court having reviewed the briefs and record on appeal has determined that oral argument would not be helpful in the determination of this case and the parties have not requested oral argument. 1 Footnote The matter is submitted for decision on the briefs and the record.


JURISDICTION

          A Stipulated Final Order was entered by the bankruptcy court on August 12, 2003. Sea Hawk timely filed a Notice of Appeal of Appeal on August 22, 2003. Concurrently therewith Sea Hawk filed its objection to the matter being heard by the Bankruptcy Appellate Panel. This court has jurisdiction under 28 U.S.C. § 158(a)(1), (c)(1)(A).

 

 

BACKGROUND

TOP     7 ABR 487 

          Sea Hawk obtained a $2 million judgment in the Alaska Superior Court against Valdez Fisheries Development Association, Inc. (hereinafter “VFDA”). At about the same time that the Sea Hawk judgment was entered against VFDA, the State of Alaska, Division of Investments (hereinafter “State”), apparently deeming itself insecure, called a secured loan owed to the State and, pursuant to that call, VFDA turned over all its liquid assets to the State. Thereafter, VFDA and the State entered into a supplemental loan agreement whereby the State advanced funds to VFDA to cover its everyday operating expenses. Under this agreement, all disbursements by VFDA were approved by the State giving the State de facto control over the financial affairs of VFDA.


          Sea Hawk, frustrated by its inability to collect on its judgment, filed a petition in the Alaska Superior Court action seeking to avoid the transfers made by VFDA to the State as fraudulent and/or preferential transfers. The state court allowed Sea Hawk to amend its action to bring the State into the action. Sea Hawk subsequently filed a motion to amend the fraudulent conveyance action to include a common-law conspiracy to defraud count against VFDA and the State. 2 Footnote Before the fraudulent conveyance action could be brought before the state court for resolution, VFDA filed a voluntary petition under chapter 11 of the Bankruptcy Code.


          During the pendency of the bankruptcy proceedings, VFDA and Sea Hawk reached a settlement agreement. The settlement agreement expressly provided that jurisdiction to interpret and enforce the settlement agreement was reserved to the bankruptcy court. This settlement agreement was submitted to the bankruptcy court for approval, which entered an order approving the settlement. 3 Footnote Subsequently, the bankruptcy case was dismissed. 4 Footnote


          After dismissal of the bankruptcy case, Sea Hawk returned to state court to pursue its action against the State. The State defended, asserting, inter alia, that, TOP     7 ABR 488  although it was not an express party to the settlement agreement, that agreement extinguished Sea Hawk’s claims against it. The Alaska Superior Court entered an order deferring to the bankruptcy court on the issue of the interpretation of the settlement agreement and the Alaska Supreme Court affirmed in an unpublished Memorandum Decision.


          Sea Hawk, complying with the state court order, petitioned the bankruptcy court to reopen the VFDA bankruptcy case, which the bankruptcy court granted. After reopening the case, the bankruptcy court raised sua sponte the question of whether it had subject matter jurisdiction to interpret the settlement agreement and requested the parties address that issue. Sea Hawk filed a motion to dismiss or, in the alternative, abstain; the State opposed this motion. The bankruptcy court denied Sea Hawk’s motion, holding that it did have subject matter jurisdiction over interpretation of the settlement agreement. 5 Footnote Sea Hawk requested leave of this court to file an interlocutory appeal from the bankruptcy court’s order; this request, presaging this decision, was denied. 6 Footnote


          Subsequently, in compliance with the directive of the bankruptcy court, Sea Hawk filed a declaratory relief action against the State requesting the bankruptcy court interpret the scope of the settlement agreement the bankruptcy court had approved. The complaint initiating the adversary action specifically challenged the subject matter jurisdiction of the bankruptcy court over the action. The State filed a motion to join VFDA as a party to the action, which was denied. Sea Hawk filed a motion for summary judgment, which was also denied and the matter set for trial. Prior to trial, the parties agreed to settle the matter without trial and submitted a joint motion and the Stipulated Final Order, which the bankruptcy court entered. The Stipulated Final Order provided:


          1. That if the matter were to be tried before the bankruptcy court, the bankruptcy court would find that the settlement agreement completely released the State from all TOP     7 ABR 489  further liability, including all claims made or could have been made in the pending state court action; and


          2. Specifically reserved to Sea Hawk its objection to the jurisdiction of the bankruptcy court.


ISSUE PRESENTED

          The sole issue before this court on appeal is whether, dismissal of the underlying bankruptcy case notwithstanding, the bankruptcy court had continued subject matter jurisdiction over the interpretation of the settlement agreement it approved. 7 Footnote


STANDARD OF REVIEW

          Legal conclusions and mixed questions of fact and law are reviewed de novo while factual determinations are reviewed for clear error. 8 Footnote Decisions of the bankruptcy court on its subject matter jurisdiction are also reviewed de novo. 9 Footnote



OPINION


I. Jurisdiction over Settlement Agreement


          That the bankruptcy court had jurisdiction to approve the settlement agreement or that approval by the bankruptcy court was a prerequisite to validating the settlement agreement in the first instance is, as is more fully discussed below, not entirely undisputed. The record does not reveal that there was any dispute between Sea Hawk and VFDA then pending before the bankruptcy court for resolution. Although it is not entirely clear from the record precisely what dispute(s) was(were) being resolved by the settlement agreement, there were clearly two matters impacted by the settlement.


          Sea Hawk had a $2 million claim against VFDA based on a state court judgment that remained in dispute (on appeal pending before the Alaska Supreme Court). Also pending in the state court was the fraudulent conveyance action brought by Sea Hawk against the State. 10 Footnote In partial support of its argument that the bankruptcy court lacked TOP     7 ABR 490  subject matter jurisdiction Sea Hawk asserts that it was not stayed from pursuing its state court claim against the State, implicitly because the bankruptcy court lacked subject matter jurisdiction over that claim. 11 Footnote This court must first determine whether the bankruptcy court had subject matter jurisdiction over the fraudulent conveyance claim. 12 Footnote On that point, Sea Hawk is plainly incorrect. The bankruptcy estate includes, inter alia, “[a]ny interest in property that the trustee recovers under section 329(b), 363(n), 543, 550, 553, or 723 of this title.” 13 Footnote The trustee is empowered to recover for the benefit of the estate all fraudulently conveyed property either under the provisions of the Bankruptcy Code, 14 Footnote or under state law using the trustee’s strong-arm powers. 15 Footnote Thus, the fraudulent conveyance action in its entirety became subject to the jurisdiction of the bankruptcy court when the bankruptcy petition was filed 16 Footnote and any action by a creditor to recover that property was stayed. 17 Footnote Indeed, from the time the petition was filed, unless otherwise authorized by the bankruptcy court, only VFDA, as the debtor in TOP     7 ABR 491  possession with the powers of a trustee, 18 Footnote was authorized to pursue avoidance of the fraudulent conveyance. 19 Footnote


          The reliance by Sea Hawk on Summers v. Hagen 20 Footnote to circumvent this result is misplaced. Summers recognized a common law action for conspiracy to fraudulently convey property. While at first blush that might appear to be an independent grounds for pursuing the State, in reality it added nothing. As the Alaska Supreme Court made clear in Summers, the remedy of damages is available only where the existing remedy of avoiding the transfer is inadequate. 21 Footnote Moreover, the measure of damages is the lesser of the value of the property conveyed or the unsatisfied amount of the debt. 22 Footnote Since the property allegedly fraudulently conveyed consisted of liquid assets (bank deposits and receivables) and recovery was sought from the transferee on both causes of action, the equitable remedy of recovery from the transferee was certainly adequate. As but a single recovery was permissible under applicable state law, VFDA as the debtor in possession and successor in interest to the judgment creditor, Sea Hawk, was the sole entity empowered to assert that fraudulent conveyance action and that action in its entirety necessarily came within the subject matter jurisdiction of the bankruptcy court.


          Thus, there were two matters affected by the settlement agreement properly subject to the jurisdiction of the bankruptcy court: (1) the disputed $2 million claim of Sea Hawk and (2) the fraudulent conveyance claim against the State. Resolution of both were within the control of VFDA as the debtor in possession, subject to bankruptcy court approval. That is, VFDA, as debtor in possession, could settle both matters by compromise subject to approval by the bankruptcy court. 23 Footnote The bankruptcy court held TOP     7 ABR 492  that the settlement agreement it approved did, in fact, resolve both matters completely. 24 Footnote


II. Retained Jurisdiction


          That being said, leaves unanswered the issue of whether the bankruptcy court retained jurisdiction to make that determination after the bankruptcy case was dismissed. Sea Hawk, primarily relying on the U.S. Supreme Court decision in Kokkonen, 25 Footnote argues that subject matter jurisdiction does exist. The State argues Kokkonen is inapplicable.


          In Kokkonen, a plaintiff brought an initial suit in a state court, alleging state law claims. The defendant removed the case to federal court on diversity grounds and filed state-law based counterclaims. The parties settled the initial dispute and executed a stipulation of dismissal, with prejudice, which "did not reserve jurisdiction in the District Court to enforce the settlement agreement; indeed, it did not so much as refer to the settlement agreement." 26 Footnote Subsequently, a dispute arose as to the plaintiff's obligations under the settlement agreement. The original defendant then filed a motion in federal court seeking to enforce the agreement. The original plaintiff challenged that motion on the grounds that the court lacked subject matter jurisdiction. The district court exercised jurisdiction over the motion, asserting that it had "inherent power" to do so. The Ninth Circuit affirmed in an unpublished decision.


          The Supreme Court reversed. The Court reasoned that, since the purpose of ancillary jurisdiction in a case like Kokkonen was to reinforce a "court's power to protect its proceedings and vindicate its authority," the fact that one party breached a settlement agreement that had not been incorporated into the court's dismissal order "in no way flouted or imperiled" the district court's authority, even if the settlement had prompted the parties to dismiss the case. 27 Footnote The Court explained that, "[a] judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order" so as to retain ancillary jurisdiction over an action arising TOP     7 ABR 493  out of the settlement agreement. On the other hand, the Court pointed out, if the parties' obligation to comply with the terms of the settlement agreement had been made part of the order of dismissal—either by separate provision (such as a provision "retaining jurisdiction" over the settlement agreement) or by incorporating the terms of the settlement agreement in the order—then "a breach of the agreement would be a violation of the order, and ancillary jurisdiction to enforce the agreement would therefore exist." 28 Footnote


          The Court did not address the question raised here—whether a bankruptcy court has continuing jurisdiction to interpret a separate order approving a settlement agreement entered and final before the underlying bankruptcy case was dismissed. Prior to Kokkonen, under controlling Ninth Circuit precedent, In re Taylor 29 Footnote and In re Franklin, 30 Footnote the unmistakably clear answer to that question would have been the bankruptcy court did have jurisdiction. It is an immutable rule in the Ninth Circuit that a panel of that court is “bound by decisions of prior panels’ unless an en banc decision, Supreme Court decision, or subsequent legislation undermines those decisions." 31 Footnote This rule applies as well to district courts within the circuit. 32 Footnote Thus, this court must determine the extent to which Kokkonen undermined Taylor and Franklin as applied to this case. For the reasons set forth below, this court is of the opinion that Taylor and Franklin remain viable and control the outcome in this case.


TOP     7 ABR 494 

          First, the court looks to post-Kokkonen decisions of the Ninth Circuit for guidance. The Ninth Circuit has recognized the equitable doctrine of ancillary jurisdiction, which allows a court to adjudicate claims related "to manage its proceedings, vindicate its authority, and effectuate its decrees,” was unaffected by Hokkonen. 33 Footnote On the other hand, it has also held that recitation in the dismissal order that it was “based on” the settlement agreement 34 Footnote or where the court clearly stated on the record an intent to retain jurisdiction but the intention was not contained in the dismissal, 35 Footnote is insufficient to retain jurisdiction. The post-Kokkonen decisions do not provide a definitive answer. Accordingly, an analysis of Kokkonen and the subsequent Ninth Circuit decisions and their application to the facts of this case is necessary.


          Whether or not the bankruptcy court reserved jurisdiction over the settlement agreement in the order dismissing the underlying bankruptcy case is irrelevant. The settlement agreement at issue in this case, although it contemplated dismissal of the underlying bankruptcy proceeding and, as the bankruptcy court noted, no dismissal would have occurred absent settlement, did not and could not effect dismissal of the underlying bankruptcy case. Dismissal resulted from a separate motion filed by VFDA. Dismissal of a chapter 11 bankruptcy proceeding, because it does not simply end a dispute between two parties but affects all interested parties to the proceeding, differs substantially from the dismissal of a lawsuit and can not occur except by court order.


Except as provided in subsection (c) of this section, upon request of a party in interest or the United States trustee or bankruptcy administrator, and after notice and a hearing, the court may convert a case under this chapter to case under chapter 7 of this title or may dismiss a case under this chapter, whichever is in the best interests of the creditors and the estate, for cause, * * *. 36 Footnote


TOP     7 ABR 495 

Notice of the hearing on a motion to dismiss or convert must be given to all creditors not less than 20 days before the hearing date. 37 Footnote Thus, notwithstanding that VFDA and Sea Hawk (as well as the State) had resolved their respective differences, dismissal of the underlying bankruptcy proceeding was not automatic. Unlike the Rule 41(a)(1)(ii) dismissal in Kokkonen that was effective without court order, 38 Footnote dismissal of the underlying bankruptcy proceeding in this case, which affected the interests of parties other than Sea Hawk, the State and VFDA, could only occur by court order.


          It is also necessary to define the precise matter before the bankruptcy court in this case. The bankruptcy court was not asked to enforce the agreement; in fact, the settlement agreement itself had been fully consummated. 39 Footnote The action in the bankruptcy court was a declaratory relief action calling upon the bankruptcy court to interpret its order, i.e., the scope of the settlement agreement the court had approved. 40 Footnote

TOP     7 ABR 496 
The effect of the settlement, not its enforcement, is at issue before the Alaska Superior Court and it is the interpretation that the Alaska Superior Court considers necessary to its determination. This differs significantly from Kokkonen. Kokkonen also acknowledged that ancillary jurisdiction is properly exercised to permit disposition by a single court claims that are factually interdependent. 41 Footnote In this case, unlike Kokkonen, where the court found that the facts supporting the claims that led to a settlement agreement and those underlying the claim that the settlement agreement was breached "have nothing to do with each other,” 42 Footnote interpretation of the settlement agreement is inseparable from the claims that it resolved. 43 Footnote


          In Kokkonen, the stipulation and order of dismissal did not even mention the settlement agreement. While the order approving the settlement agreement in this case did not expressly incorporate the settlement agreement, it approved a specific settlement agreement upon the motion of the debtor in possession, VFDA. Logically, when the bankruptcy court expressly approved the settlement agreement between VFDA and Sea Hawk, it was approving, and thereby adopting as part of its order, the terms of that settlement agreement. This is sufficient to have implicitly retained jurisdiction over the settlement agreement. 44 Footnote To require a bankruptcy court to include within an order approving a settlement agreement specific language adopting the settlement agreement exalts form over substance. The settlement agreement at bar specifically reserved jurisdiction in the bankruptcy court to interpret and enforce the agreement. In the absence of a contrary provision in the order approving the settlement agreement, it must be presumed that the bankruptcy court approved the TOP      7 ABR 497  entire agreement, including the jurisdiction retention provision. Moreover, the order did more than simply approve the settlement agreement, it was necessary to its effectiveness. While it is recognized there is a split of authority regarding the efficacy of unapproved settlements, 45 Footnote this court need not get embroiled in that controversy because Sea Hawk and VFDA specifically made the settlement agreement contingent upon obtaining bankruptcy court approval. In addition, the settlement agreement provided that in order for VFDA to fund the settlement, VFDA was to obtain a million dollar loan from the State. Since that contemplated loan could not, under the circumstances, possibly have been considered in the ordinary course of business, bankruptcy court approval was required by the Bankruptcy Code. 46 Footnote


          Also of import is the fact that, in approving the settlement, the bankruptcy court did not have unfettered discretion. The standard for approval of a proposed settlement has been established by the Ninth Circuit. In order to determine whether a proposed settlement is fair and equitable, the bankruptcy court must consider four factors: (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, TOP      7 ABR 498  inconvenience and delay necessarily attending it; and (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises. 47 Footnote


          To say that the bankruptcy court in this case did not commit its authority when it approved the settlement agreement overlooks legal reality. The settlement agreement in this case was more than simply two parties saying to the court “we have resolved our differences and no longer need you to resolve them,” as was the case of the Rule 41(a)(1)(ii) dismissal involved in Kokkonen. In this case, while it is true that the parties resolved their differences, effectuation of that resolution was dependent upon approval by the bankruptcy court, which was required to consider the interests of parties other than the parties who had reached a resolution of their differences.


          Finally, retention of subject matter jurisdiction over the interpretation of the settlement agreement approved by the bankruptcy court promotes an important policy consideration: comity between the federal and state judiciaries. In this case, the Alaska Superior Court, before determining the effect that a settlement agreement had on a case before it, has requested the federal court that approved that settlement agreement interpret its scope. As the Ninth Circuit stated in inferring retained jurisdiction was exclusive:


The reason why exclusivity is inferred is that it would make no sense for the district court to retain jurisdiction to interpret and apply its own judgment to the future conduct contemplated by the judgment, yet have a state court construing what the federal court meant in the judgment. Such an arrangement would potentially frustrate the federal district court's purpose. (Citation omitted). It would also impose an uncomfortable burden on the state judge, to determine what the federal judge meant. 48 Footnote



CONCLUSION


          The facts in this case do not fit neatly within either Kokkonen or the post-Kokkonen decisions of the Ninth Circuit. The bankruptcy court had subject matter jurisdiction over the issues resolved by the settlement agreement, 49 Footnote the resolution of which were core proceedings. 50 Footnote Unlike Kokkonen, not only did the order refer to the TOP     7 ABR 499  settlement agreement, the court clearly committed its authority to the process. Entry of the order was not based on the settlement agreement but, rather, upon the exercise of the court’s authority to approve the agreement. If the order approving the settlement does not by necessary implication incorporate the terms of the settlement agreement it references, including the specific retention of jurisdiction over its interpretation, 51 Footnote it is impossible to divine the purpose of the order or its effect. Kokkonen and the post-Kokkonen decisions of the Ninth Circuit are simply reeds too thin to support a decision by a district court that the holdings of TaylorFranklin do not apply to and govern the outcome of this case. 52 Footnote This court can not fit the square peg formed by the facts of this case into the round hole created by Kokkonen.


          The judgment of the bankruptcy court is, therefore, AFFIRMED.

Dated: March 15, 2004

 

RALPH R. BEISTLINE

United States District Judge


Appearances:

For Appellant:

          Kevin P. Sullivan, Sullivan & Sorenson (Seattle, WA)

          Michael T. Schein, Reed, Longyear, Malnati & Ahrens (Seattle, WA)

          Laurel J. Peterson (Anchorage, AK) [Opening Brief]

          Michael Moberly, Law Offices of Michael A. Moberly (Anchorage, AK) [Reply Brief]


For Appellee:

          Mary Ellen Beardsley, Assistant Attorney, General, Greg D. Renkes, Attorney General, State of Alaska (Anchorage, AK)






1 AK LBR 8012-1.


2 It does not appear from the record that the state court had ruled on this motion.


3 The order approving the settlement agreement does not expressly reserve jurisdiction nor does it expressly incorporate the settlement agreement.


4 The dismissal order does not expressly reserve jurisdiction over any issue or matter in the bankruptcy court.


5 In re Valdez Fisherman’s Development Ass’n, 7 A.B.R. 222 (Bankr. D. Ak. 2002).


6 Sea Hawk Seafoods, Inc. v. State of Alaska, et al, 7 A.B.R. 308 (D. Ak. 2002).


7 Sea Hawk does not challenge in this appeal correctness of what the bankruptcy court would have decided had the matter gone to trial.


8 Beaupied v. Chang (In re Chang), 163 F.3d 1138, 1140 (9th Cir. 1998)


9 See Hacienda Valley Mobile Estates v. City of Morgan Hill, 353 F.3d 651, 654 (9th Cir. 2003).


10 The pending fraudulent conveyance action was not removed to the bankruptcy court.


11 If the bankruptcy court lacked jurisdiction over the fraudulent conveyance action against the State any order that it entered would be invalid and have no preclusive effect to the extent it affected that action or the claims asserted in it. See Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478, 481 (9th Cir. 1989).


12 See Beneficial Trust Deeds v. Franklin (In re Franklin), 802 F.2d 324, 326 (9th Cir. 1986)


13 11 U.S.C. § 541(a)(3).


14 11 U.S.C. § 548(a).


15 11 U.S.C. § 544(b); Alexander v. Compton (In re Bonham); 229 F.3d 750, 760 n.2 (9th Cir. 2000).


16 Sea Hawk appears to recognize that property fraudulently conveyed is returned to the transferor/debtor. In the state court action, Sea Hawk’s prayer requested that the State be ordered to return the monies to VFDA, not that it be paid to Sea Hawk.


17 11 U.S.C. § 362(a)(3) (“any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate”); American National Bank v. Mortgageamerica Corp (In re Mortgageamerica Corp.), 714 F.2d 1266, 1275 (5th Cir. 1975); see also Federal Deposit Insurance Corp. v. Hirsch (In re Colonial Realty Co.), 980 F.2d 125, 131-32 (2nd Cir. 1992).


18 11 U.S.C. § 1107(a).


19 Official Committee of Unsecured Creditors of Cybergenics Corp ex rel Cybergenics Corp v. Chinery (In re Cybergenics, Corp.), 330 F.3d 548, 568-69 (3rd Cir.) (en banc), cert. dism’d, 124 S.Ct. 530 (2003); See Hartford Underwriters Insurance Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000).


20 852 P.2d 1165 (Alaska 1993).


21 825 P.2d at 1169.


22 825 P.2d at 1170.


23 F.R.Bank.P. 9019(a).


24 As noted above, this holding has not been challenged on this appeal.


25 Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994).


26 511 U.S. at 377.


27 511 U.S. at 380.


28 511 U.S. at 381.


29 Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478, 481 (9th Cir. 1989). (“Under the law of this circuit, the bankruptcy court retains subject matter jurisdiction to interpret orders entered prior to dismissal of the underlying bankruptcy case.”) (Emphasis by the court.)


30 Beneficial Trust Deeds v. Franklin (In re Franklin), 802 F.2d 324, 326-27 (9th Cir. 1986) (“Simply put, bankruptcy courts must retain jurisdiction to construe their own orders if they are to be capable of monitoring whether those orders are ultimately executed in the intended manner. Requests for bankruptcy courts to construe their own orders must be considered to arise under title 11 if the policies underlying the Code are to be effectively implemented.”).


31 United States v. Washington, 872 F.2d 874, 880 (9th Cir. 1989).


32 Bell v. Hill, 190 F.3d 1089, 1093 (9th Cir. 1999).


33 U.S. v. Alpine Land & Reservoir Co., 174 F.3d 1007, 1012 n. 5 (9th Cir. 1997) (“The latter [referring to management of proceedings, vindication of authority, and effectuation of decrees] is at work here. So long as the dispute in this case is related to the district court 's earlier decrees, the district court retains jurisdiction to adjudicate the dispute.”).


34 O’Connor v. Colvin, 70 F.3d 530, 532-33 (9th Cir. 1995).


35 Hagestad v. Tragesser, 49 F.3d 1430, 1433 (9th Cir. 1990).


36 11 U.S.C. § 1112(b).


37 F.R.Bank.P. 2002(a)(4).


38 It is unclear what significance, if any, the “It is so ordered” by the court had in Kokkonen. Under Rule 41(a)(1)(ii) the stipulated dismissal was effective without order of court when it was filed.


39 This raises a perplexing question: What was the perceived necessity for referral to the bankruptcy court for an interpretation of the scope of the settlement agreement? It is clear under Summers that, even if there was a fraudulent conveyance or conspiracy to make a fraudulent conveyance, Sea Hawk’s recovery is limited to the unsatisfied portion of its judgment against VFDA. Moreover, under Summers, only a judgment creditor may bring a conspiracy to make a fraudulent conveyance action. Under the settlement agreement, which Sea Hawk has acknowledged was fully consummated, all claims Sea Hawk had against VFDA were extinguished. In short, Sea Hawk has acknowledged that the judgment debt it was owed by VFDA has been satisfied and it is no longer a creditor at all, let alone a judgment creditor. Thus, unless Sea Hawk is asserting that the VFDA obligation has not been fully satisfied or that it reserved its claim against the State, which does not appear from the record to be the case, interpretation of the settlement agreement may be irrelevant to resolution of the dispute between Sea Hawk and the State. The controlling issue may really be the effect of the release by Sea Hawk of all claims it had against VFDA in the lawsuit that was pending in the state court.


40 The court is aware that in Lisowski Law Firm Chtd v. Elias (In re Elias) 215 B.R. 600, 604 (9th Cir. BAP 1997), aff’d on other grounds, 188 F.3d 1160 (9th Cir. 1999), the Bankruptcy Appellate Panel, in dictum, indicated in a similar situation (referral by a state court to a bankruptcy court the question of the proper interpretation of the bankruptcy court’s order) it would be requesting an improper advisory opinion. This court disagrees. In any case in which the court is requested to interpret its decision is in a sense a request for an advisory opinion, as it is in any declaratory relief action.


41 511 U.S. at 379 citing Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 469, n. 1 (1974); Moore v. New York Cotton Exchange, 270 U.S. 593, 610 (1926).


42 511 U.S. at 380.


43 See State of Montana v. Goldin (In re Pegasus Gold Corp.), 296 B.R. 227, 243 (D. Nev. 2003).


44 Cf. U.S. v. Alpine Reservoir & Land Co., supra, 174 F.3d at 1013 (holding that specific retention of appellate jurisdiction in the decree implicitly retained jurisdiction in the district court).


45 Some courts have concluded that under F.R.Bank.P. 9019, settlement agreements are not enforceable absent court approval. In re Sparks, 190 B.R. 842 (Bankr. N.D. Ill.1996); In The Leslie Fay Cos., Inc., 168 B.R. 294 (Bankr. S.D. N.Y.1994); In re Pugh, 167 B.R. 251 (Bankr. M.D. Fla.1994); In re Rothwell, 159 B.R. 374 (Bankr. D. Mass.1993) (relying on In re Lloyd, Carr and Co., 617 F.2d 882, 885 (1st Cir.1980) a case decided under the Bankruptcy Act and Bankruptcy Rule 919(a)). On the other hand, courts have concluded that a settlement agreement is enforceable even prior to bankruptcy court approval. In re Lyons Trans. Lines, Inc., 163 B.R. 474 (Bankr. W.D. Pa.1994); In the Matter of Cotton, 127 B.R. 287 (Bankr. M.D. Ga.1991), aff 'd, 136 B.R. 888 (M.D. Ga.1992), rev 'd on other grounds, 992 F.2d 311 (11th Cir.1993). These latter courts reason that "[t]he absence of court approval does not mean that the parties did not agree to the settlement. It only means that the court has not yet approved it." See In re Sparks, 190 B.R. at 843. The focus of Rule 9019 is to protect other creditors against bad deals made between one creditor and the debtor. See Id.


46 11 U.S.C. § 364(b).


47 Woodson v. Fireman’s Fund Ins. Co. (In re Woodson), 839 F.2d 610, 620 (9th Cir. 1988).


48 Flanagan v. Arnaiz, 143 F.3d 540, 545 (9th Cir. 1998).


49 28 U.S.C. § 1334(a), (e).


50 28 U.S.C. § 157(b)(2)(B), (H).


51 See Kokkonen v. Guardian Life Ins. Co. of America, supra, 511 U.S. at 581-82; Sea Hawk Seafoods, Inc. v. State of Alaska, et al, supra, 7 A.B.R. at 312


52  Cf. Lisowski Law Firm Chtd v. Elias (In re Elias), 188 F.3d 1160, 1162 (9th Cir. 1999) (apparently disagreeing with the bankruptcy court and bankruptcy appellate panel on the issue of jurisdiction but affirming on other grounds, indicated that Taylor survives Kokkonen).