                                                            FILED
                                                             OCT 01 2014
 1                          NO FO PUBL A IO
                              T R     IC T N
                                                         SUSAN M. SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
 2                                                         OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                         )      BAP No.     CC-13-1311-KuDaKi
                                    )
 6   FLASHCOM, INC.,                )      Bk. No.     12-16351
                                    )
 7                       Debtor.    )      Adv. No.    12-01339
     _______________________________)
 8                                  )
     CAROLYN A. DYE, Liquidating    )
 9   Trustee,                       )
                                    )
10                       Appellant, )
                                    )
11   v.                             )      MEMORANDUM*
                                    )
12   ANDRA SACHS; ASHBY ENTERPRISES,)
     INC.; MAX-SINGER PARTNERSHIP, )
13                                  )
                         Appellees. )
14   _______________________________)
15                 Argued and Submitted on September 18, 2014
                             at Pasadena, California
16
                             Filed – October 1, 2014
17
                 Appeal from the United States Bankruptcy Court
18                    for the Central District of California
19            Honorable Robert N. Kwan, Bankruptcy Judge, Presiding
20
     Appearances:      David R. Weinstein of Weinstein Law Firm APC
21                     argued for appellant Carolyn A. Dye, Liquidating
                       Trustee; Gerald M. Serlin of Benedon & Serlin LLP
22                     argued for appellees Myles Sachs,** Ashby
23
24        *
           This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
25   have (see Fed. R. App. P. 32.1), it has no precedential value.
26   See 9th Cir. BAP Rule 8013-1.
          **
27         On February 10 2014, after this appeal was fully briefed,
     Counsel for the appellees filed a notice of suggestion of death
28                                                         continue...
 1                  Enterprises, Inc. and Max-Singer Partnership.
 2
     Before: KURTZ, DAVIS*** and KIRSCHER, Bankruptcy Judges.
 3
 4                              INTRODUCTION
 5        Flashcom Inc.’s chapter 111 liquidating trustee Carolyn A.
 6   Dye appeals from an order denying in part her motion for entry of
 7   a $9 million stipulated judgment.     Dye asserted that she was
 8   entitled to entry of the judgment against Andra Sachs and the
 9   other appellees in accordance with a “buyout option” in the
10   parties’ settlement agreement.    Dye claimed that, under the
11   buyout option, Sachs was granted the option of either paying
12   $62,500 or having entered against her and the other appellees the
13   $9 million stipulated judgment.    Because Sachs did not timely pay
14   the $62,500 buyout option amount, Dye contended that she was
15
16        **
           ...continue
     of Andra Sachs. On September 15, 2014, the Orange County
17   Superior court appointed Myles Sachs as the Special Administrator
18   for purposes of representing the decedent’s estate at oral
     argument in this appeal. Based on the Superior Court
19   appointment, Myles Sachs filed a motion seeking to substitute
     into this appeal as a party in place of Andra Sachs. Because the
20   Superior Court appointment expired by its own terms as of the
     close of business on the date of oral argument, Myles Sachs’
21
     motion is ORDER DENIED, except to the extent of permitting him to
22   represent the decedent’s estate at the September 18, 2014 oral
     argument.
23
          ***
            The Honorable Laurel E. Davis, Bankruptcy Judge for the
24   District of Nevada, sitting by designation.
25        1
           Unless specified otherwise, all chapter and section
26   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all "Rule" references are to the Federal Rules of Bankruptcy
27   Procedure, Rules 1001-9037. All “Civil Rule” references are to
     the Federal Rules of Civil Procedure, and all “Evidence Rule”
28   references are to the Federal Rules of Evidence.

                                       2
 1   entitled to enter and enforce the $9 million stipulated judgment.
 2        The bankruptcy court determined that, under California law,
 3   the buyout option constituted an unenforceable penalty.     We agree
 4   with that determination.     We further hold that the bankruptcy
 5   court had inherent authority to modify the court-approved
 6   settlement agreement to limit the amount of the stipulated
 7   judgment to the amount of damages Dye actually suffered as a
 8   result of Sachs’ nonpayment of the $62,500.     On this record, the
 9   bankruptcy court correctly exercised that authority.
10        However, the bankruptcy court misconstrued California law
11   when it excluded from the $62,500 judgment prejudgment interest
12   on and after April 1, 2012.     This limited aspect of the court’s
13   decision must be vacated, and the matter must be remanded so that
14   the court can amend the judgment to provide for prejudgment
15   interest up to the date of entry of the judgment.
16            Accordingly, we AFFIRM IN PART, VACATE IN PART, AND REMAND
17   WITH INSTRUCTIONS.
18                                    FACTS
19        Andra and her husband Brad2 founded Flashcom, an internet
20   service provider, in 1998. Initially, the Sachses were Flashcom’s
21   only shareholders.     However, in June 1999, the Sachses
22   relinquished their sole ownership and control of Flashcom when
23   they agreed to sell shares of Flashcom preferred stock to certain
24   venture capital companies.
25        In February 2000, Andra and Flashcom reached an agreement
26
27
          2
           We refer to the Sachses by their first names for ease of
28   reference. No disrespect is intended.

                                        3
 1   pursuant to which Flashcom redeemed a substantial portion of
 2   Andra’s Flashcom shares in exchange for $9 million.    Flashcom
 3   paid the $9 million to Andra by wire transfer on February 23,
 4   2000.
 5        Later that same year, in December 2000, Flashcom commenced a
 6   chapter 11 bankruptcy case in the Central District of California
 7   and, roughly a year later, confirmed a chapter 11 liquidating
 8   plan.    Under the plan, Dye was appointed to serve as liquidating
 9   trustee.
10        In July 2002, Dye filed a complaint against Brad, Andra, the
11   venture capital companies holding Flashcom shares, and others.
12   The complaint stated several different claims for relief.    Some
13   of them were resolved by summary judgment motions, while others
14   were resolved after trial.    And yet others were resolved, at
15   least in part, by means of the settlement from which this appeal
16   arose.    The two claims relevant to the settlement and this appeal
17   are Dye’s third and fourth claims for relief seeking to avoid and
18   recover as a preference the $9 million stock redemption in favor
19   of Andra.
20        Meanwhile, also in July 2002, Brad filed a personal
21   chapter 7 bankruptcy case in the Southern District of Florida,
22   and Robert Furr was appointed to serve as the chapter 7 trustee
23   in that case.    Furr initiated his own litigation against Andra
24   and her affiliated companies (collectively, “Andra Parties”).
25        On November 1, 2005, the California bankruptcy court entered
26   an order pursuant to Rule 9019(a) approving the settlement
27   between Furr, Dye and the Andra Parties.    On June 14, 2006, the
28   Florida bankruptcy court entered a similar settlement approval

                                       4
 1   order.
 2        The settlement, referred to as the “Global Settlement
 3   Agreement,” was global in the sense that it addressed and
 4   resolved the litigation then pending between Furr, Dye, and the
 5   Andra Parties.   On the other hand, the settlement was not global
 6   as it did not fully dispose of all of the claims as against all
 7   of the defendants in Dye’s adversary proceeding.
 8        The settlement provided for Andra to pay Furr $500,000 on
 9   the “Approval Date” (as defined in the agreement) and another
10   $250,000 within six months of the Approval Date.3
11        In addition to these payments, Andra agreed to sign two
12   stipulated judgments, one known as the “Dye Avoidance Judgment”
13   and the other known as the “Dye Liability Judgment.”   The Dye
14   Avoidance Judgment declared that the $9 million wire transfer
15   paid to Andra was avoided as a preferential transfer under
16   § 547(b).   The Dye Liability Judgment provided pursuant to
17   § 550(a) for the joint and several liability of the Andra Parties
18   for the $9 million preferential transfer.
19        The settlement provided for the immediate entry of the Dye
20   Avoidance Judgment but did not permit Dye to immediately record
21   the Dye Avoidance Judgment or to take any immediate action with
22   respect to the Dye Liability Judgment.   Rather, both stipulated
23   judgments were subject to Andra’s right to exercise what was
24
25        3
           While these payments were directly payable to Furr, they
26   also stood to benefit Flashcom’s creditors. Post-settlement, Dye
     expected to be by far the largest creditor of Brad’s bankruptcy
27   estate, so the lion’s share of any distribution from Brad’s
     bankruptcy estate ultimately was expected to end up in Dye’s
28   hands for the benefit of Flashcom’s creditors.

                                      5
 1   known as the “Dye Buyout Option” as described in paragraphs 9 and
 2   10 of the settlement.   In essence, if Andra timely paid the
 3   amount specified in the Dye Buyout Option, such payment would
 4   satisfy any and all liability of the Andra Parties to Dye and the
 5   Flashcom bankruptcy estate.     If Andra did not timely pay the Dye
 6   Buyout Option amount, then Dye was entitled to record the Dye
 7   Avoidance Judgment and to take all action necessary to enforce
 8   the Dye Liability Judgment.
 9        The timing and amount of the payment due under the Dye
10   Buyout Option were governed by two complex paragraphs, which
11   stated as follows:
12        10.   Dye Buyout Option.
13             a. The payment due under the Dye Buyout Option
          shall be $50,000 if, within 36 months of the Approval
14        Date, Dye receives at least $2,000,000 from the [non-
          settling] defendants in the in the [sic] Dye v. Andra
15        Adversary Proceeding . . . (collectively, "Other
          Defendants"). Such $50,000 payment shall be due within
16        60 days after Dye receives, and notifies Andra that she
          has received, at least $2,000,000 from the Other
17        Defendants.
18             b. The payment due under the Dye Buyout Option
          shall be $62,500 if Dye's recovery against the Other
19        Defendants in the Dye v. Andra Adversary Proceeding
          within 36 months of the Approval Date is less than
20        $2,000,000 (including if there is no such recovery at
          all). Such $62,500 payment shall be due within the
21        earlier of (i) the end of the 37th month after the
          Approval Date or (ii) such time as there is a final
22        resolution of the Dye v. Andra Adversary Proceeding by
          entry of a judgment or an order approving a settlement
23        agreement.
24   Global Settlement Agreement at ¶ 10.
25        As for the Approval Date, the settlement agreement defines
26   it as:
27        [T]he first business day following the tenth day after
          the entry of the later of the two orders of the
28        respective Bankruptcy Courts approving this Agreement,

                                        6
 1        so long as no stay of either of those orders has been
          entered prior to that date, provided that an
 2        irrevocable escrow of $500,000 has been made with
          Shulman Hodges & Bastian LLP (the "Escrow Agent") prior
 3        to the hearing on the settlement by Andra. . . . If
          such a stay is entered, the Approval Date will be the
 4        first business day after the stay is dissolved or
          otherwise becomes ineffective, as long as the Agreement
 5        has not been materially changed by a court in the
          interim. If such a change has occurred, proceedings
 6        upon this Agreement will be determined in accordance
          with that ruling.
 7
 8   Id. at ¶ 2.
 9        In a vacuum, and without the benefit of knowing (as we do)
10   what actually transpired, these paragraphs were nebulous at best
11   and nonsensical at worst.   Nonetheless, the critical dates for
12   the Dye Buyout Option were not overwhelmingly difficult to
13   calculate in light of the events that actually transpired –
14   events that all could have been ascertained by monitoring the
15   dockets in the relevant bankruptcy cases and adversary
16   proceeding.   The following is a summary of the key events and the
17   critical dates they generated.
18   •    First, the Approval Date was June 26, 2006 (the first
19        business day following ten days after the Florida bankruptcy
20        court’s June 14, 2006 approval of the settlement).
21   •    Second, the deadline for fixing the amount of the Dye Buyout
22        Option payment was June 26, 2009 (36 months following the
23        Approval date).
24   •    Third, by June 26, 2009, Dye had not obtained either any
25        settlement with or any judgment against the non-settling
26        defendants; such a settlement or judgment would have been a
27        prerequisite to any recovery along the lines contemplated in
28        subparagraph 10(a) of the settlement agreement.

                                      7
 1   •    Fourth, given the absence of the requisite recovery of at
 2        least $2 million by June 26, 2009, the timing and amount of
 3        the Dye Buyout Option payment were controlled by
 4        subparagraph 10(b) of the settlement agreement.
 5   •    And fifth, under the events as they transpired, subparagraph
 6        10(b) required payment of $62,500 by no later than July 31,
 7        2009 (the end of the 37th month following the approval
 8        date).
 9   See Stipulation of Facts (June 21, 2012) at ¶¶ 5, 9-10.
10        In 2006, Andra timely paid $750,000 to Furr in accordance
11   with the terms of the settlement agreement.   However, Andra did
12   not timely make the Dye Buyout Option payment.
13        Dye did not demand payment, serve any notice, or otherwise
14   communicate with any of the Andra Parties in July 2009 or
15   thereafter, until January 2012, when Dye’s counsel, David
16   Weinstein, contacted the Andra Parties’ former counsel, James
17   Bastian, and informed him of Dye’s contention that the Andra
18   Parties were liable for the full $9 million in accordance with
19   the settlement agreement and the stipulated judgments.    In
20   response, Bastian advised Weinstein that he no longer represented
21   the Andra Parties.
22        In March 2012, Dye filed a motion requesting that the
23   California bankruptcy court enter the Dye Liability Judgment
24   against the Andra Parties based on Andra’s failure to make the
25   Dye Buyout Option payment.   After receiving her service copy of
26   the motion, Andra more than once offered to pay $62,500 in
27   satisfaction of her obligations under the settlement agreement,
28   but Dye declined these offers based on her contention that the

                                      8
 1   Andra Parties were liable for the full $9 million.
 2        For the next year, the parties litigated the issue of
 3   whether Dye was entitled to entry of the $9 million judgment.
 4   The parties filed numerous briefs, declarations, exhibits and
 5   evidentiary objections.   Among other things, Andra argued that
 6   the $9 million stipulated judgment constituted an unenforceable
 7   penalty under California law.   Andra also argued that she was
 8   entitled to equitable relief from the court-approved settlement
 9   and the stipulated judgments.   To paraphrase Andra, the following
10   facts and circumstances justified equitable relief:
11   •    Andra timely paid $750,000 of the approximately $800,000 in
12        agreed-upon settlement payments.
13   •    Andra was ready, willing and able to pay the final remaining
14        $50,000 or $62,500 settlement installment on the
15        settlement’s Approval Date, but Dye insisted on a deferred
16        final payment at some future date to be determined in
17        accordance with the complex formula set forth in the
18        settlement; Dye refused to permit Andra to make the final
19        payment on or around the Approval Date.
20   •    Weinstein told Bastian during settlement negotiations that
21        Dye did not intend/expect4 to enforce a $9 million judgment
22
          4
23         This was one of the few factual disputes between the
     parties. Dye insisted that Weinstein never used the word
24   “intend” but rather merely said that Dye did not “expect” that
     she ever would be in a position to enforce the $9 million
25   judgment because she expected Andra to exercise the Dye Buyout
26   Option. Regardless, it is plain from the record that no one –
     not the bankruptcy court and certainly neither of the parties –
27   thought at the time of settlement that the $9 million judgment
     ever would be entered or enforced. The implications of this lack
28                                                         continue...

                                      9
 1        against the Andra Parties but instead sought to use the
 2        settlement agreement and the stipulated judgments as a means
 3        of advancing Dye’s claims against the non-settling
 4        defendants.
 5   •    Once the settlement had been approved, Dye filed a series of
 6        motions against the non-settling defendants predicated upon
 7        the Andra Parties’ admissions set forth in the settlement
 8        agreement and the stipulated judgments.
 9   •    The Dye Buyout Option provisions in the settlement
10        agreement, which governed the payment of the final $50,000
11        or $62,500 settlement installment were confusing and did not
12        identify a specific future date for payment, but rather
13        required the Andra Parties to calculate the future payment
14        date by ascertaining and considering a number of different
15        factors and variables.
16   •    Dye never apprised the Andra Parties of the status of the
17        remainder of her adversary proceeding against the non-
18        settling parties, which was one of the variables for
19        determining the amount and timing of the Dye Buyout Option
20        payment.
21   •    Dye never demanded payment of the $62,500 at the time when
22        Dye claims it was due, nor at any point for two and a half
23        years thereafter.
24   •    In March 2012 and thereafter, Dye refused Andra’s repeated
25        offer to pay the final $62,500.
26
          4
27         ...continue
     of expectation and reliance regarding the $9 million judgment is
28   discussed infra.

                                    10
 1   •    Dye admitted that, when the settlement agreement was entered
 2        into, she had no expectation of entering or enforcing the
 3        Dye Liability Judgment.
 4        The bankruptcy court advised the Andra parties at one of the
 5   hearings that, if they wanted the court to consider granting
 6   equitable relief from the court-approved settlements, they would
 7   need to file a formal motion seeking that relief under Civil
 8   Rule 60(b).   The Andra Parties thereafter filed a motion framing
 9   their pre-existing request for equitable relief within the rubric
10   of Civil Rule 60(b)(6).
11        The court held a number of hearings and ultimately issued
12   two separate memorandum decisions, the latter of which it
13   subsequently amended.
14        In the first memorandum decision, the bankruptcy court
15   determined that, although California law was not binding, the
16   court could consider California law on liquidated damages in
17   addressing the Andra Parties’ request for equitable relief.    The
18   court also determined that the Dye Buyout Option was an
19   unenforceable penalty under Cal. Civ. Code § 1671(b).   The court
20   further determined that, based on all of the circumstances
21   presented, Civil Rule 60(b) was a timely and appropriate means
22   for addressing the Andra Parties’ request for equitable relief.
23   Based on these determinations, and on all of the circumstances,
24   the bankruptcy court held that the Andra Parties were entitled to
25   equitable relief and that Dye only was entitled to entry of a
26   stipulated judgment in the amount of $62,500 plus interest.
27        In its supplemental memorandum decision, as amended, the
28   bankruptcy court elaborated on the particular circumstances that

                                     11
 1   led it to conclude that it would be inequitable to permit Dye to
 2   enter and enforce the $9 million judgment.   The key facts and
 3   circumstances posited by the Andra Parties were largely
 4   uncontroverted, and the court essentially adopted virtually all
 5   of those facts and circumstances as part of its own findings.
 6        But the bankruptcy court’s findings went even further than
 7   the Andra Parties’ factual recitations.   The court inferred from
 8   the contents of the settlement agreement and from both parties’
 9   accounts of what they said, did and thought during the
10   negotiation of the settlement agreement that Dye and Weinstein
11   intentionally structured the settlement, the Dye Buyout Option
12   and the stipulated judgments to set up the Andra Parties for
13   failure.   The court explained that Weinstein knew from his
14   settlement discussions with Bastian that Bastian planned to
15   discontinue his representation of Andra soon after the settlement
16   agreement was approved and that Andra likely would be
17   unrepresented after that point and likely would be left trying to
18   figure out for herself the complex provisions of the Dye Buyout
19   Option.
20        The following comments of the court are representative of
21   the court’s findings:
22        These perverse circumstances at best represented a
          “perfect storm” that [the Andra Parties] are liable for
23        a judgment 10 times more than what they settled for (or
          144 times what remained due), which was in violation of
24        applicable state contract law as an unreasonable and
          unenforceable penalty, or at worst, a “trap for the
25        unwary” set by [Dye] and her counsel, who intentionally
          insisted that the settlement agreement provide for no
26        notice to [the Andra Parties] of the last settlement
          payment when it became due and who expected that [the
27        Andra Parties were] not likely to [be] represented by
          counsel . . . after the settlement was approved. The
28        court can discern no rational basis for the complicated

                                     12
 1        settlement payment structure of the Dye Buyout Option
          of the Global Settlement Agreement, inconsistent notice
 2        provisions, and Trustee’s failure to give any notice of
          the amount due [once] the amount was fixed other than
 3        to trap the unwary [Andra Parties] into paying the full
          judgment amount. There is no other legitimate
 4        collection purpose for the so-called Dye Buyout Option
          because [the Andra Parties] wanted to make an early
 5        payment of the full settlement amount as evidenced by
          their payment of $750,000 of the either $800,000 or
 6        $812,500, over 90% of the settlement amount due, and
          based on Andra Sachs’ uncontroverted statements in her
 7        declarations [that she was] ready, willing and able to
          pay the balance when [she] entered into the settlement
 8        in 2005.
 9   Amd. Supp. Mem. Dec. (June 24, 2013) at 22:14-23:3.
10        Based on the bankruptcy court’s two memorandum decisions, it
11   entered an order which partially granted Dye’s motion, but only
12   to the extent of providing for the entry of the Dye Liability
13   Judgment in the amount of $62,500 plus interest.    The court
14   thereafter entered the $62,500 judgment.    In that judgment, the
15   court cut off the accrual of prejudgment interest as of April 1,
16   2012.     According to the court, Andra’s offer to pay $62,500 as of
17   that date was sufficient to relieve the Andra Parties of any
18   further liability for prejudgment interest.
19        Dye timely appealed.
20                                JURISDICTION
21        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
22   §§ 1334 and 157(b)(2)(F), and we have jurisdiction under
23   28 U.S.C. § 158.
24                                   ISSUES
25        1.    Did the bankruptcy court commit reversible error when it
26   granted equitable relief to the Andra Parties and modified the
27   terms of the parties’ court-approved settlement agreement to
28   limit Dye to a stipulated judgment in the amount of $62,500 plus

                                       13
 1   interest?
 2        2.   Did the bankruptcy court commit reversible error when it
 3   cut off the accrual of prejudgment interest on the $62,500 as of
 4   April 1, 2012?
 5                           STANDARDS OF REVIEW
 6        We review the bankruptcy court’s grant of equitable relief
 7   for an abuse of discretion.    See Zurich Am. Ins. Co. v. Int'l
 8   Fibercom, Inc. (In re Int'l Fibercom, Inc.), 503 F.3d 933, 939,
 9   945 (9th Cir. 2007).
10        A bankruptcy court abuses its discretion when it applies an
11   incorrect legal rule, or when the factual findings supporting its
12   decision are illogical, implausible or without support in
13   inferences that may be drawn from facts in the record.    United
14   States v. Hinkson, 585 F.3d 1247, 1261–62 & n. 21 (9th Cir. 2009)
15   (en banc).
16        The issue concerning the accrual of prejudgment interest
17   turns upon the effectiveness of Andra’s tender of the $62,500.
18   This question, in turn, required the bankruptcy court to construe
19   state law, which construction we review de novo.    See Trishan
20   Air, Inc. v. Fed. Ins. Co., 635 F.3d 422, 426-27 (9th Cir. 2011).
21        We can affirm on any ground supported by the record.
22   Thompson v. Paul, 547 F.3d 1055, 1058-59 (9th Cir. 2008).
23                                 DISCUSSION
24        Dye contends on appeal that the bankruptcy court’s decision
25   contravened binding Ninth Circuit authority.    Relying on
26   Twentieth Century-Fox Film Corp. v. Dunnahoo, 637 F.2d 1338 (9th
27   Cir. 1981), Dye argues that the bankruptcy court erred in two
28   distinct ways.   According to Dye, the court should not have

                                       14
 1   considered state contract law principles in the process of
 2   granting relief to the Andra Parties and also should not have
 3   permitted the Andra Parties to request that relief roughly seven
 4   years after the court entered an order approving the parties’
 5   settlement agreement.
 6        Dunnahoo is inapposite.   Dunnahoo involved an entered
 7   consent judgment and the efforts of one of the parties to the
 8   consent judgment to enforce it as entered.   Here, Dye was seeking
 9   to enforce a court-approved settlement agreement and to cause the
10   bankruptcy court, in accordance with the settlement agreement, to
11   enter a stipulated judgment signed by the adverse party (Andra)
12   but not previously entered.    Because the stipulated judgment at
13   issue – the Dye Liability Judgment – was not previously entered,
14   it was not final, and hence neither Dunnahoo nor Civil Rule 60(b)
15   were applicable to the Dye Liability Judgment.   See Civil
16   Rule 60(b) (stating that this Civil Rule applies to “final”
17   judgments, orders and proceedings).
18        A different Ninth Circuit case, one that neither of the
19   parties cited, is more helpful to us in resolving this appeal.
20   See A & A Sign Co. v. Maughan, 419 F.2d 1152 (9th Cir. 1969),
21   cited with approval in Meyer v. Lenox (In re Lenox), 902 F.2d
22   737, 740 (9th Cir. 1990).
23        In Maughan, A & A Sign Co. performed some construction work
24   for the debtor prior to the debtor's bankruptcy filing and
25   claimed a materialmen's lien under Arizona law after the debtor
26   filed bankruptcy.   Subsequent settlement negotiations between the
27   bankruptcy trustee and A & A resulted in them entering into a
28   compromise stipulation pursuant to section 27 of the Bankruptcy

                                      15
 1   Act (11 U.S.C. § 50),5 which stipulation was approved by the
 2   district court.   419 F.2d at 1154.
 3        The stipulation effectively provided: (1) that A & A held a
 4   duly-perfected materialmen's lien under Arizona law; (2) that the
 5   lien secured the reasonable value of the services and materials
 6   furnished by A & A, less a specified sum paid in exchange for
 7   A & A's release of its lien against one of three parcels of real
 8   property; and (3) that A & A continued to hold a valid and
 9   enforceable materialmen's lien against the other two parcels of
10   real property in the approximate amount of $14,000.   Id.
11        Several months after the compromise stipulation was approved
12   by the district court, the bankruptcy trustee filed a motion
13   seeking to modify the compromise stipulation.   According to the
14   trustee, he had not intended in entering into the stipulation to
15   permit A & A to retain its lien as against both parcels of real
16   property and the language in the stipulation permitting A & A to
17   retain its lien as against both parcels was inadvertent on the
18   part of the trustee.   A & A opposed the motion and presented
19   contrary evidence indicating that its retention of the lien as
20   against both parcels was a critical term of the stipulation that
21   it bargained for.   Id. at 1154-55.
22        The district court granted the trustee's motion, but the
23   Ninth Circuit reversed because, on the record presented, there
24   was no evidence or legal basis that would permit the bankruptcy
25
          5
26         11 U.S.C. § 50 was similar to current Rule 9019 and
     provided in relevant part that a bankruptcy trustee "may, with
27   the approval of the court, compromise any controversy arising in
     the administration of the estate upon such terms as he may deem
28   for the best interest of the estate."

                                     16
 1   court to excise one term of the compromise stipulation over the
 2   objection of one of the parties but leave the remainder of the
 3   compromise stipulation in tact.    Id. at 1155-56.     Even though the
 4   Ninth Circuit reversed, the Ninth Circuit held in relevant part
 5   that bankruptcy courts have the inherent equitable power to
 6   modify their prior orders, including orders approving compromise
 7   stipulations.   Id. at 1155.   The Ninth Circuit further opined
 8   that the district court’s modification of the compromise
 9   stipulation could have been sustained over A & A’s objection “had
10   there been findings supported by substantial evidence warranting
11   reformation of the stipulation.”       Id. at 1156.
12        In short, Maughan stands for the proposition that bankruptcy
13   courts have inherent equitable authority to modify or vacate
14   compromise stipulations if circumstances so justify.       Maughan
15   further stands for the proposition that basic contract law
16   principles – like contract reformation – are relevant and can be
17   considered.
18        Maughan is binding Ninth Circuit law.       It has not been
19   overruled or superseded by statute.       Moreover, In re Lenox, cited
20   above, indicates that Maughan’s teachings continue to be vital,
21   relevant and valid today.   Given the similarity between the
22   compromise provision contained in section 27 of the Bankruptcy
23   Act and Rule 9019, which currently governs compromises in
24   bankruptcy cases, we know of no reason why we are not bound to
25   follow Maughan.
26        Only one small aspect of Maughan appears outdated.       Maughan
27   indicated that orders approving compromises are interlocutory
28   orders, whereas under the “pragmatic approach” to the finality of

                                       17
 1   bankruptcy court orders, orders approving compromises are now
 2   treated as final orders for appeal purposes.      See Expeditors
 3   Int'l v. Citicorp N. Am. (In re Colortran), 218 B.R. 507, 510
 4   (9th Cir. BAP 1997).   Nonetheless, decisions following Maughan
 5   and In re Lenox have established that the bankruptcy court’s
 6   inherent authority to modify and vacate its prior orders exists
 7   even when such orders are final.      See, e.g., In re Int'l
 8   Fibercom, Inc., 503 F.3d at 945; Heritage Pac. Fin., LLC v.
 9   Montano (In re Montano), 501 B.R. 96, 114 n.15 (9th Cir. BAP
10   2013); see also In re Lenox, 902 F.2d at 740 (“although [Civil
11   Rule] 60(b) refers to relief from final orders, it does not
12   restrict the bankruptcy court's power to reconsider any of its
13   previous orders when equity so requires.”).
14        The Ninth Circuit only has identified one general limitation
15   on the bankruptcy court’s inherent authority to modify, vacate or
16   reconsider its prior orders.   The bankruptcy court only may do so
17   to the extent that no intervening rights have vested in reliance
18   thereon.   See In re Lenox, 902 F.2d at 739-40 (citing Chinichian
19   v. Campolongo (In re Chinichian), 784 F.2d 1440, 1443 (9th Cir.
20   1986)).    In In re Int'l Fibercom, Inc., the Ninth Circuit refined
21   this vested rights limitation.   503 F.3d at 944-45.     The Ninth
22   Circuit there ruled that, so long as the objecting party has not
23   detrimentally relied on the aspect of the order that is being
24   subjected to clarification or modification, the bankruptcy court
25   can exercise its equitable powers.      Id.
26        Here, we have found no evidence in the record that Dye
27   detrimentally relied on the Dye Buyout Option provisions
28   purporting to entitle her to enter the $9 million judgment.        In

                                      18
 1   fact, Dye admitted that, at the time she entered into the
 2   settlement agreement, she never expected to be able to enter or
 3   enforce the $9 million judgment.     Moreover, the only action that
 4   Dye apparently has taken in furtherance of her purported
 5   entitlement to the $9 million judgment is the litigation she has
 6   initiated seeking to enter the judgment.    However, assuming a
 7   particular litigation position based on the provision in question
 8   does not constitute the type of reliance or “vested rights” that
 9   would preclude the bankruptcy court from exercising its inherent
10   authority.   See, e.g., In re Lenox, 902 F.2d at 739 (no
11   preclusive reliance where creditor opposed plan confirmation and
12   appealed therefrom based on terms of prior court-approved
13   stipulation); In re Int'l Fibercom, Inc., 503 F.3d at 937-38 (no
14   preclusive reliance where creditor initiated relief from stay,
15   administrative claim, summary judgment and appeal proceedings all
16   based on agreed-upon terms set forth in the debtor’s contract
17   assumption motion, which the court previously granted by entered
18   order).
19        There is one other limitation that the Ninth Circuit
20   sometimes has recognized regarding the bankruptcy court’s
21   inherent authority to modify one of its prior orders.
22   Ordinarily, the court cannot exercise its modification authority
23   over the objection of the adverse party by excising one provision
24   of the parties’ stipulation but leaving the rest of the parties’
25   stipulation in tact.   Maughan, 419 F.2d at 1155; see also
26   Stephens Institute v. N.L.R.B., 620 F.2d 720, 725-26 (9th Cir
27   1980)(recognizing the same rule and the same limitation in a non-
28   bankruptcy civil case).

                                     19
 1        Even so, this anti-modification limitation is itself
 2   equitable in nature, and the Ninth Circuit has refused to apply
 3   it when the proponent’s own inequitable conduct instigated the
 4   dispute.   Stephens Institute, 620 F.2d at 725-26.      On this
 5   record, and in light of the bankruptcy court’s uncontested
 6   findings that Dye refused Andra’s offers to pay the $50,000 or
 7   62,500 on the Approval Date, insisted on the complex payment
 8   provisions set forth in the Dye Buyout Option, and intentionally
 9   structured these provisions in the hopes of setting up the Andra
10   Parties for failure, Dye is in no position to invoke this anti-
11   modification limitation.    See id.
12        There is a separate and independent reason why the anti-
13   modification limitation does not apply here.       As indicated in
14   Maughan, 419 F.2d at 1156, this limitation does not apply where
15   the application of contract law principles support the
16   modification.   Here, the bankruptcy court determined under
17   California contract law that the Dye Buyout Option was an
18   unenforceable penalty provision.      We agree.   As stated by the
19   California Supreme Court:
20        A liquidated damages clause will generally be
          considered unreasonable, and hence unenforceable under
21        [Cal. Civil Code] section 1671(b), if it bears no
          reasonable relationship to the range of actual damages
22        that the parties could have anticipated would flow from
          a breach. The amount set as liquidated damages must
23        represent the result of a reasonable endeavor by the
          parties to estimate a fair average compensation for any
24        loss that may be sustained. In the absence of such
          relationship, a contractual clause purporting to
25        predetermine damages must be construed as a penalty. A
          penalty provision operates to compel performance of an
26        act and usually becomes effective only in the event of
          default upon which a forfeiture is compelled without
27        regard to the damages sustained by the party aggrieved
          by the breach. The characteristic feature of a penalty
28        is its lack of proportional relation to the damages

                                      20
 1        which may actually flow from failure to perform under a
          contract.
 2
 3   Ridgley v. Topa Thrift & Loan Ass'n, 17 Cal.4th 970, 977 (1998)
 4   (citations and internal quotation marks omitted).6
 5        Here, there was no rational relationship between the $62,500
 6   Dye Buyout Option payment and the $9 million judgment.   When
 7   evaluating the validity of a liquidated damages clause in a
 8   settlement agreement, the appropriate measure of damages for
 9   nonpayment of the settlement amount ordinarily is tied to the
10   amount due under the settlement agreement and not to the amount
11   originally sought by the plaintiff in its complaint.   See
12   Greentree Fin. Grp., Inc. v. Execute Sports, Inc.,
13   163 Cal.App.4th 495, 499-500 (2008).
14        There is no evidence in the record here to support Dye’s
15   implicit assertion on appeal that her original preference claim
16   of $9 million is an appropriate measure of her damages resulting
17   from the non-payment of the $62,500 Dye Buyout Option amount.   To
18   the contrary, Dye’s compromise motion effectively represented
19   that the payments provided for in the settlement agreement
20   constituted a fair and reasonable recovery for Flashcom’s
21
          6
           While Dye has argued on appeal that the bankruptcy court
22
     should not have considered state contract law principles in the
23   process of granting the Andra Parties’ request for equitable
     relief, both parties seem to agree with the bankruptcy court’s
24   assessment that, to the extent state law does apply to this
     matter, California law governs. Because Dye has not argued that
25   any other state’s law should govern, she has waived this
26   argument. See Christian Legal Soc'y v. Wu, 626 F.3d 483, 487–88
     (9th Cir. 2010) (“We review only issues [that] are argued
27   specifically and distinctly in a party's opening brief.”);
     Brownfield v. City of Yakima, 612 F.3d 1140, 1149 n.4 (9th Cir.
28   2010) (same).

                                    21
 1   creditors on account of the $9 million preference claim.
 2   Moreover, Dye made this representation with the admitted
 3   expectation that she never would be in a position to enter or
 4   enforce the $9 million judgment.
 5        Dye argues that the Dye Buyout Option was not a liquidated
 6   damages provision at all, but rather was a true option.     In other
 7   words, according to Dye, the Dye Buyout Option presented the
 8   Andra Parties with two bona fide alternatives: (a) either pay
 9   $62,500, or (b) be subject to liability for a $9 million
10   judgment.    This argument lacks merit.   The California Supreme
11   Court has made it clear that, when considering whether a
12   provision constitutes an unenforceable liquidated damages
13   provision or a valid alternate means of performance, substance
14   should prevail over both the form and the wording of the
15   agreement.    See Ridgley, 17 Cal.4th at 979-80.   As Ridgley
16   stated:
17        We have consistently ignored form and sought out the
          substance of arrangements which purport to legitimate
18        penalties and forfeitures. Looking to the substance
          rather than the form of the disputed provision, we
19        agree with the superior court and the Court of Appeal
          dissenter that it was invalid because it was intended
20        to, and did, operate as a penalty for late payment.
          However one describes its form, the intent and effect
21        of the disputed provision here was that any late
          payment or other default by plaintiffs would result in
22        a severe penalty . . . .
23   Id. (citations and internal quotation marks omitted).
24        Here, what Dye phrased as an option was nothing more than a
25   penalty.    No rational person would willingly choose the so-called
26   “alternate performance” of liability under the $9 million
27   judgment especially when, as here, it is undisputed that the
28   adverse party was ready, willing and able to pay the $62,500 Dye

                                      22
 1   Buyout Option amount.   Furthermore, it is telling that Dye sought
 2   to enforce the Dye Buyout Option precisely as a penalty – as a
 3   consequence of Andra’s failure to timely pay the Dye Buyout
 4   Option amount.
 5        Nor can Dye escape this result by referencing the fact that
 6   the parties eschewed terminology like “breach” and “damages”.
 7   Dye’s argument is wholly at odds with Ridgley’s mandate that
 8   substance should control over the form and wording used by the
 9   parties.
10        Relying on Schneider v. Verizon Internet Servs., Inc.,
11   400 F. App’x 136, 138 (9th Cir. 2010), Dye contends that the
12   relative benefits and burdens of the alternatives must be weighed
13   at the time the agreement is entered into.   But Schneider is an
14   unpublished decision and its facts are distinguishable.
15   Schneider dealt with the issue of whether an early termination
16   fee constituted a penalty or a bona fide alternative to
17   performance.   No one here has attempted to characterize the Dye
18   Buyout Option as the equivalent of an early termination fee, nor
19   would the record support such a characterization.
20        Also relying upon Schneider, Dye asserts that the only way
21   to properly measure whether the Dye Buyout Option constitutes an
22   unenforceable penalty is to measure the $9 million judgment
23   against Dye’s original preference claim and Andra’s risk of
24   liability thereunder.   This assertion runs afoul of Greentree
25   Fin. Grp., Inc. and our discussion of that case above, in which
26   we concluded that there was no rational basis here for tying the
27   consequences for non-payment of the Dye Buyout Option amount to
28   the stated amount of Dye’s preference claim.

                                     23
 1        Dye further points out that the Andra Parties knew and fully
 2   understood the potential risks associated with the Dye Buyout
 3   Option and that the settlement agreement was a commercial
 4   transaction entered into by sophisticated parties who at the time
 5   were both represented by counsel.    This much is true.
 6   Nonetheless, the California courts have made it clear that
 7   sophisticated parties engaged in commercial transactions are not
 8   exempt from the protections afforded under Cal. Civil
 9   Code § 1671(b).   See Ridgley, 17 Cal.4th at 981 n.5; Harbor
10   Island Holdings v. Kim, 107 Cal.App.4th 790, 799 (2003).
11        Our decision upholding the bankruptcy court’s ruling
12   limiting Dye to a $62,500 judgment is consistent with contract
13   reformation principles – the exact same principles referenced in
14   Maughan, 419 F.2d at 1156.   As discussed in the facts section
15   above, at the time the settlement was entered into and approved,
16   the parties did not expect that the Dye Liability Judgment ever
17   would be enforced.   Indeed, at that time, the express purpose and
18   motivation underlying the Dye Liability Judgment was to use it
19   against the non-settling defendants and not against the Andra
20   Parties.   After Dye lost her litigation against the non-settling
21   defendants, Dye’s motivation regarding how she wanted to use the
22   Dye Liability Judgment obviously changed, and the explicit terms
23   of the Dye Buyout Option facilitated Dye’s change in motivation.
24        But application of contract reformation principles here
25   would prevent Dye from successfully acting upon her changed
26   motivation.   As explained in Maughan: “[r]eformation is an
27   appropriate remedy to correct a written instrument when the words
28   it contains do not express the meaning the parties agreed upon

                                     24
 1   . . . .”   Id. at 1556.    See also Restatement (Second) Contracts
 2   § 155 (1981).   In short, at the time of settlement, the parties
 3   never really meant for the Dye Liability Judgment ever to be
 4   enforced against the Andra Parties.     Even though the settlement
 5   agreement as written appears to permit such enforcement, contract
 6   reformation principles could be invoked to conform the written
 7   instrument to the parties’ actual expectations at the time of
 8   contract formation.
 9        We acknowledge that contract reformation was not put at
10   issue by the parties.     Even so, we find the above contract
11   reformation analysis instructive because of its role in Maughan
12   and because it would lead to the same result as that reached by
13   declaring the $9 million judgment an unenforceable penalty.
14        We also acknowledge that, at oral argument, Dye’s counsel
15   indicated that the bankruptcy court excluded some of the parties’
16   evidence pursuant to Evidence Rule 408.     But it is difficult to
17   reconcile any such exclusion with the bankruptcy court’s findings
18   and factual statements, many of which appear to hinge on events
19   that transpired during settlement negotiations.     Regardless,
20   Evidence Rule 408 does not impede our analysis.     Dye did not
21   address Evidence Rule 408 or the court’s evidentiary exclusion
22   rulings in her appeal briefs, so she has forfeited any issue
23   relating thereto.   See Christian Legal Soc'y, 626 F.3d at 487–88;
24   Brownfield, 612 F.3d at 1149 n.4.      More importantly, it is well
25   established that Evidence Rule 408 does not exclude evidence
26   related to a settlement when it is offered for the purposes of
27   interpreting or enforcing the settlement.     See Advisory Committee
28   Notes accompanying 2006 amendments to Evidence Rule 408 (citing

                                       25
 1   Coakley & Williams v. Structural Concrete Equip., 973 F.2d 349,
 2   353-54 (4th Cir. 1992)); see also Cates v. Morgan Portable Bldg.
 3   Corp., 780 F.2d 683, 691 (7th Cir. 1985) ("Obviously a settlement
 4   agreement is admissible to prove the parties' undertakings in the
 5   agreement, should it be argued that a party broke the
 6   agreement.").
 7        Most of Dye’s other arguments on appeal concern whether the
 8   bankruptcy court correctly relied upon Civil Rule 60(b) to grant
 9   the Andra Parties relief from the terms of the court-approved
10   settlement agreement.   In light of our analysis and holding that
11   the bankruptcy court’s decision can be affirmed as an appropriate
12   exercise of the court’s inherent authority under § 105(a), we
13   need not reach Dye’s Civil Rule 60(b) issues, and we decline to
14   address them.
15        Somewhat unrelated to her Civil Rule 60(b) issues, Dye
16   argues that the bankruptcy court abused its discretion by
17   suggesting to the Andra Parties that they should file a motion
18   pursuant to Civil Rule 60(b) seeking equitable relief from the
19   court-approved settlement agreement.   This so-called suggestion
20   was made at a hearing on Dye’s motion held on October 31, 2012.
21   However, rather than providing legal advice to the Andra Parties
22   regarding what they needed to do to prevail, the entirety of the
23   hearing transcript reflects that the court and the Andra Parties’
24   counsel were engaged in a lengthy colloquy during which one of
25   the concerns the court raised was whether it could grant
26   equitable relief – relief that the Andra Parties already had
27   informally requested in their briefs in opposition to Dye’s
28   motion – in the absence of a formal motion.

                                     26
 1        Rather than attempting to give legal advice, the bankruptcy
 2   court appears to have been merely expressing its concern that the
 3   Andra Parties needed to present their pre-existing request for
 4   equitable relief in a procedurally proper format.   In any event,
 5   even if there were some sort of error or abuse of discretion
 6   associated with the court’s so-called suggestion that the Andra
 7   Parties needed to file a formal Civil Rule 60(b) motion, any such
 8   error was harmless, and we must ignore harmless error.   Van Zandt
 9   v. Mbunda (In re Mbunda), 484 B.R. 344, 355 (9th Cir. BAP 2012).
10   The bankruptcy court did not need a formal motion from the Andra
11   Parties in order to grant them equitable relief from the court-
12   approved settlement.   Rather, under the court’s inherent
13   authority, the court sua sponte could grant such relief.     See
14   § 105(a); see also In re Lenox, 902 F.2d at 740 (“Although
15   FRCP 60(b) provides that a court may relieve a party from a final
16   order upon motion, it does not prohibit a bankruptcy judge from
17   reviewing, sua sponte, a previous order.”).
18        There is one final issue we must address.   The court
19   determined that Dye was not entitled to prejudgment interest on
20   the $62,500 on and after April 1, 2012.   According to the court,
21   on or about that date, Andra’s belated offer to make the $62,500
22   payment and Dye’s refusal thereof cut off Dye’s entitlement to
23   prejudgment interest, per Cal. Civ. Code § 1504, which provides:
24        [a]n offer of payment or other performance, duly made,
          though the title to the thing offered be not
25        transferred to the creditor, stops the running of
          interest on the obligation, and has the same effect
26        upon all its incidents as a performance thereof.
27        The bankruptcy court acknowledged that the following
28   requirements ordinarily apply before an offer of payment can cut

                                     27
 1   off the accrual of interest:
 2        (1) full performance; (2) at a proper time and place;
          (3) made by the debtor or someone on her behalf; (4) to
 3        the creditor or some authorized person; (5) at a place
          appointed by the creditor; (6) timely;
 4        (7) unconditional; and (8) offer made in good faith.
 5   Amd. Supp. Mem. Dec. (June 24, 2013) at 34:20-23 (citing
 6   1 Witkin, Summary of California Law, Contracts, § 771, at
 7   pp. 861-862 (10th ed. 2005 and 2013 Supp.)).
 8        The court further acknowledged that Andra’s tender did not
 9   fully comply with these requirements.      Nonetheless, the court
10   concluded that Andra’s tender was sufficient to cut off
11   prejudgment interest because of Dye’s failure to give Andra
12   notice of when the Dye Buyout Option payment was due.      The court
13   reasoned that, under Cal. Civ. Code § 1511,7 Dye’s failure to
14
          7
15            Cal. Civ. Code § 1511 provides:

16        The want of performance of an obligation, or of an
          offer of performance, in whole or in part, or any delay
17        therein, is excused by the following causes, to the
          extent to which they operate:
18
19        1. When such performance or offer is prevented or
          delayed by the act of the creditor, or by the operation
20        of law, even though there may have been a stipulation
          that this shall not be an excuse; however, the parties
21        may expressly require in a contract that the party
          relying on the provisions of this paragraph give
22
          written notice to the other party or parties, within a
23        reasonable time after the occurrence of the event
          excusing performance, of an intention to claim an
24        extension of time or of an intention to bring suit or
          of any other similar or related intent, provided the
25        requirement of such notice is reasonable and just;
26
          2. When it is prevented or delayed by an irresistible,
27        superhuman cause, or by the act of public enemies of
          this state or of the United States, unless the parties
28                                                         continue...

                                       28
 1   give notice excused Andra from full compliance with the tender
 2   requirements.
 3        On appeal, Dye in essence argues that the bankruptcy court
 4   incorrectly invoked Cal. Civ. Code § 1511 to excuse Andra’s full
 5   compliance with the tender requirements.    We agree with Dye on
 6   this point.   Dye had no duty, contractual or otherwise, to give
 7   Andra notice of the timing or amount of the Dye Buyout Option
 8   payment.   California cases excusing an improper or delayed tender
 9   of performance based on the adverse party’s conduct are
10   predicated on the adverse party having some sort of unmet duty
11   under the parties’ agreement or, in the alternative, on the
12   adverse party affirmatively acting in some way, after the
13   agreement was entered into, to effectively prevent timely and
14   proper tender in accordance with parties’ agreement.    See, e.g.,
15   Pierce v. Lukens, 144 Cal. 397, 401-02 (1904); Ninety Nine Invs.,
16   Ltd. v. Overseas Courier Serv. (Singapore) Private, Ltd.,
17   113 Cal.App.4th 1118, 1135-36 (2003); Connolly v. Lake Cnty.
18   Canning Co., 95 Cal.App. 768, 771-72 (1928).
19        Here, in contrast, it is undisputed that Dye had no duty
20   under the settlement agreement to give Andra any notice unless
21   Dye recovered more than $2 million from the non-settling
22   defendants (which she did not).    Nor is there anything in the
23
          7
24         ...continue
          have expressly agreed to the contrary; or,
25
26        3. When the debtor is induced not to make it, by any
          act of the creditor intended or naturally tending to
27        have that effect, done at or before the time at which
          such performance or offer may be made, and not
28        rescinded before that time.

                                       29
 1   record indicating that Dye ever led Andra to believe that she
 2   would give Andra notice of the timing or amount of the Dye Buyout
 3   Option payment.
 4        The bankruptcy court’s ruling suggests that it believed that
 5   the same law, circumstances and equities that permitted it to
 6   limit the consequences arising from Andra’s failure to timely pay
 7   the Dye Buyout Option amount somehow also permitted the court to
 8   cut off prejudgment interest.   We disagree.   Dye’s entitlement to
 9   prejudgment interest was governed not by the settlement agreement
10   but instead by Cal. Civ. Code §§ 1504 and 1511, and the
11   bankruptcy court’s ability to limit this entitlement was
12   restricted by the terms of those statutes as construed by the
13   California courts.
14        Accordingly, the bankruptcy court erred when it cut off the
15   accrual of prejudgment interest on and after April 1, 2012.   We
16   thus will vacate this limited aspect of the court’s ruling and
17   will remand with the instruction that the bankruptcy court on
18   remand should amend its judgment to include prejudgment interest
19   up to the date of entry of the judgment, June 24, 2013.
20                               CONCLUSION
21        For the reasons set forth above, we AFFIRM the bankruptcy
22   court’s decision, except for the court’s ruling on prejudgment
23   interest.   This limited aspect of the court’s decision is VACATED
24   AND REMANDED WITH INSTRUCTIONS, as set forth above.
25
26
27
28

                                     30
