                                                                             FILED
                                                                              APR 22 2020
                          NOT FOR PUBLICATION
                                                                         SUSAN M. SPRAUL, CLERK
                                                                            U.S. BKCY. APP. PANEL
                                                                            OF THE NINTH CIRCUIT


             UNITED STATES BANKRUPTCY APPELLATE PANEL
                       OF THE NINTH CIRCUIT

In re:                                               BAP No. ID-19-1198-BGL

RALPH DEAN ISOM and PAULA ISOM;                      Bk. No. 4:15-bk-40763
I & S FARMS, A General Partnership,

                    Debtors.

RALPH DEAN ISOM; PAULA ISOM; I & S
FARMS, A General Partnership,

                    Appellants,

v.                                                          MEMORANDUM*

R. SAM HOPKINS, Chapter 7 Trustee;
BRAD HALL & ASSOCIATES, INC.;
FARMS, LLC,

                    Appellees.

                   Argued and Submitted on February 27, 2020
                            at Pasadena, California

                                 Filed – April 22, 2020


         *
         This disposition is not appropriate for publication. Although it may be cited
 for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no
 precedential value, see 9th Cir. BAP Rule 8024-1.
                Appeal from the United States Bankruptcy Court
                           for the District of Idaho

          Honorable Joseph M. Meier, Chief Bankruptcy Judge, Presiding

Appearances:        Brent T. Robinson of Robinson & Associates argued for
                    appellants Ralph Dean Isom, Paula Isom, and I & S Farms;
                    James Alphonse Spinner of Service, Spinner & Gray argued
                    for appellee R. Sam Hopkins, Chapter 7 Trustee; Robert J.
                    Maynes of Maynes Taggart PLLC argued for appellees Brad
                    Hall & Associates, Inc., and Farms, LLC.



Before:       BRAND, GAN and LAFFERTY, Bankruptcy Judges.

                                  INTRODUCTION

      Appellants Ralph Dean Isom, Paula Isom, and I & S Farms (collectively

"Isoms") appeal an order approving a compromise between the chapter 71

trustee and co-appellees Brad Hall and Associates, Inc. and Farms, LLC

(together "Hall"). The Isoms also appeal the order denying reconsideration of

the compromise order. Appellees argue that we lack jurisdiction over the

compromise order, because the Isoms included only the reconsideration

order in their initial notice of appeal. Appellees also argue that the appeal is

equitably moot, because the settlement has been substantially consummated


       1
        Unless specified otherwise, all chapter and section references are to the
 Bankruptcy Code, 11 U.S.C. §§ 101-1532, all "Rule" references are to the Federal Rules of
 Bankruptcy Procedure, and all "Civil Rule" references are to the Federal Rules of Civil
 Procedure.

                                             2
and would be extremely difficult to unwind.

      We conclude that we have jurisdiction over the compromise order, and

that the appeal is not equitably moot. We further conclude that the

bankruptcy court did not abuse its discretion in approving the compromise.

Accordingly, we AFFIRM.

      I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A.    Prepetition events

      Prior to their bankruptcy filing, the Isoms owned and operated a farm

in Idaho (the "Farm"). The Farm was encumbered by two mortgages securing

two promissory notes in favor of Rabo Agrifinance. The Rabo liens also

covered all water rights associated with the Farm, including what is known

as the Palisades Water Shares, and all irrigation equipment and fixtures upon

the Farm.

      The Isoms defaulted on the Rabo loans. In June 2014, Rabo obtained a

judicial foreclosure judgment. Shortly thereafter, Rabo assigned to Hall the

mortgages, the promissory notes and the foreclosure judgment in exchange

for $5.95 million. Around this same time and in an apparent attempt to avoid

foreclosure, the Isoms sought a loan using the Farm as collateral. At that time,

the Farm appraised for $11.4 million. The loan was never funded due to the

clouded title issues.

      In September 2014, the Isoms and Hall entered into a deed-in-lieu of

foreclosure agreement, whereby the Isoms delivered deeds for the Farm to


                                       3
Hall and Hall released all claims against the Isoms based upon the Rabo loans

and foreclosure judgment. The Isoms also conveyed to Hall all water rights,

including the Palisades Water Shares, any appurtenances thereto, and all

irrigation equipment and fixtures upon the Farm.

      A few days later, Hall entered into a lease agreement with the Isoms for

the Farm. The lease included an option for the Isoms to purchase the Farm

back from Hall. Ultimately, the Isoms defaulted on the lease and were unable

to exercise the option.

      The Isoms also owned a rental house and a 10-acre parcel with a shop.

In 2015, PacifiCorp obtained a default judgment against the Isoms for

$406,698.23. PacifiCorp's judgment lien fully encumbered the rental house

and the 10-acre parcel. During the Isoms' bankruptcy case, Hall purchased

PacifiCorp's judgment lien claim as well as other third-party unsecured

claims totaling nearly $900,000.

B.    Postpetition events

      The Isoms filed a chapter 11 bankruptcy case on July 31, 2015. I & S

Farms filed a chapter 11 case fourteen months later. The cases were

consolidated in April 2017.

      While in chapter 11, the Isoms filed an adversary proceeding against

Hall, seeking to avoid the transfer of the Farm by the deed-in-lieu of

foreclosure under § 548 and Idaho Code §§ 55-913 and 55-914. The Isoms

maintained that the transfer was constructively fraudulent: (1) they received


                                       4
less than reasonably equivalent value — the Farm was valued at $11.4 million

at the time of the deed-in-lieu and the transfer to Hall satisfied approximately

$6.5 million in debt; and (2) as a result of the transfer, they became insolvent.

      When the Isoms' consolidated case was converted to chapter 7,2 R. Sam

Hopkins was appointed as the trustee ("Trustee"). He continued to prosecute

the avoidance action against Hall.

      1.       Settlement with Hall

      Trustee and Hall ultimately reached a settlement of the avoidance

action. Per the terms of the settlement agreement:

•     Hall would subordinate all unsecured claims ($892,297.84) and
      administrative claims ($70,469.19) filed and acquired during the
      bankruptcy, to all other allowed administrative, priority, and unsecured
      claims;

•     Hall would pay Trustee $300,000, which together with current funds in
      the estate would pay all other unsecured and priority claims;

•     Trustee would dismiss the adversary proceeding against Hall with
      prejudice;

•     Trustee would assign to Hall the right to pursue and recover potential
      assets of the estate, including Aladdin's Flowers, LLC — a flower shop
      allegedly co-owned by Mr. Isom and his sister;

•     Trustee would acknowledge Hall's secured judgment liens on the rental
      house and 10-acre parcel; and


       2
           The Isoms were ultimately denied a discharge under § 727(a)(6)(A).

                                             5
•     the parties would release all claims between them.

      2.    The motion to compromise

      Trustee then moved for approval of the settlement. He argued that it

was fair and equitable and more favorable than a possible sale of the Farm, if

recovered from Hall after potentially lengthy and costly litigation.

      The Isoms objected to the settlement, arguing that it was not fair and

equitable. Hall was receiving $13 million in assets (the $12 million Farm,

Palisades Water Shares worth $400,000, the rental house and 10-acre parcel

worth $200,000, irrigation handlines worth $355,000 and air tubes worth

$20,000) in exchange for only $6.75 million (the $6.2 million foreclosure

judgment, $250,000 Hall paid to KeyBank to release a secured lien on the

Farm, and $300,000 cash). The Isoms argued that Trustee owed them a

fiduciary duty as beneficiaries of the residual of the bankruptcy estate, and he

was not considering their best interest in the settlement.

      As to the merits of the avoidance claims, the Isoms argued that Trustee

had not conducted a solvency analysis. The Isoms claimed that they were

rendered insolvent after the deed-in-lieu, with a negative net worth of

$540,000. The transfer also left them with an unreasonably small capital, and

they were unable to pay their debts as they came due.

      Several months later, after the parties conducted more discovery, the

bankruptcy court held a five-day evidentiary hearing on the settlement.

Several witnesses testified including Mr. Isom, Trustee, and accountants for

                                        6
the Isoms and Trustee. The parties presented competing evidence regarding

the value of the Farm and whether a sale would result in a surplus. In

addition, Trustee testified that it would be difficult to prove the Isoms'

insolvency if the avoidance action were pursued. They had been less than

forthcoming with information about their assets, and some assets were never

turned over despite a turnover order. Further, their bankruptcy schedules

contained many errors, and Trustee had little confidence in what few

financial records he was able to get from them.3

      3.     The bankruptcy court's ruling on the compromise motion

      On May 28, 2019, the bankruptcy court entered an oral ruling and

written order approving the compromise ("Compromise Order"). In

reviewing the four factors under Martin v. Kane (In re A & C Properties), 784

F.2d 1377 (9th Cir. 1986), the court found that it was fair and equitable, that

Trustee had exercised his reasonable business judgment, and that the

settlement fell above the lowest point in the range of reasonableness.

      The Isoms timely filed a motion to alter or amend the Compromise

Order, which the bankruptcy court denied on July 24, 2019 ("Reconsideration

Order"). The Isoms filed a notice of appeal on August 5, 2019. Only the

Reconsideration Order was attached to the notice. They then filed an

amended notice of appeal on August 21, 2019, to include the Compromise

       3
          Mr. Isom testified that many of his legal papers, including closing documents
 for the Isoms' various properties, were in a safe that was stolen and thrown in a ditch.
 Mr. Isom also testified that he personally set fire to boxes of papers in his driveway.

                                             7
Order.

C.    Post-appeal events

      The Isoms unsuccessfully moved for a stay pending appeal before the

bankruptcy court and the BAP. Appellees then moved to dismiss the appeal

for two reasons: (1) an appeal of the Compromise Order was untimely

because it was not attached to the Isoms' initial notice of appeal; and (2) even

if the appeal of the Compromise Order was timely, it was equitably moot.

The motions panel denied the motion to dismiss. It deferred consideration of

the timeliness issue to the merits panel. It further determined that appellees

had not met their burden of establishing mootness, but left that issue open for

the merits panel to consider.

                                II. JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(A) and (N). Subject to our discussion below, we have jurisdiction

under 28 U.S.C. § 158.

                                   III. ISSUES

1.    Do we have jurisdiction to review the Compromise Order?

2.    Is the appeal equitably moot?

3.  Did the bankruptcy court abuse its discretion in approving the
compromise?

4.     Did the bankruptcy court abuse its discretion in denying the motion
to alter or amend?



                                        8
                        IV. STANDARDS OF REVIEW

      We examine our own jurisdiction, including questions of mootness, de

novo. Ellis v. Yu (In re Ellis), 523 B.R. 673, 677 (9th Cir. BAP 2014).

      We review the bankruptcy court's decision to approve a compromise

for an abuse of discretion. Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re

Mickey Thompson Entm't Grp., Inc.), 292 B.R. 415, 420 (9th Cir. BAP 2003).

Likewise, we review the bankruptcy court's denial of a motion to alter or

amend judgment under Civil Rule 59(e) for abuse of discretion. Ocwen Loan

Serv., LLC v. Marino (In re Marino), 577 B.R. 772, 781 (9th Cir. BAP 2017).

      A bankruptcy court abuses its discretion if it applies the wrong legal

standard, or misapplies the correct legal standard, or if it makes factual

findings that are illogical, implausible, or without support in inferences that

may be drawn from the facts in the record. See TrafficSchool.com, Inc. v. Edriver

Inc., 653 F.3d 820, 832 (9th Cir. 2011) (citing United States v. Hinkson, 585 F.3d

1247, 1262 (9th Cir. 2009) (en banc)).

                                V. DISCUSSION

A.    We have jurisdiction to review the Compromise Order.

      Trustee and Hall argue that we lack jurisdiction to consider the

Compromise Order because the initial notice of appeal attached only the

Reconsideration Order, and the amended notice of appeal, which now

included the Compromise Order, was filed long after the 14-day appeal

period for that order had run. As a result, Trustee and Hall argue that the


                                          9
scope of the appeal is limited to the Reconsideration Order.

       Rule 8002 provides that, if a party timely moves to alter or amend a

judgment under Rule 9023, then the 14-day deadline under Rule 8002 for

filing an appeal runs from entry of the order disposing of the last such motion

outstanding. If the motion is timely under Rule 9023, we have jurisdiction to

review both the underlying order and the order denying reconsideration.

Tennant v. Rojas (In re Tennant), 318 B.R. 860, 866 n.5 (9th Cir. BAP 2004)

(distinguishing between appeal of an order denying a Rule 9024 motion and

appeal of a timely Rule 9023 motion). Here, the motion to alter or amend was

filed within 14 days after entry of the Compromise Order, and the initial

notice of appeal was filed within 14 days after entry of the Reconsideration

Order. We thus have jurisdiction to review the Compromise Order.

      As for the Isoms' failure to attach the Compromise Order in the initial

notice of appeal, Rule 8003(a)(3)(B) requires attachment of the appealed

order. Although there is no controlling authority interpreting the scope of

Rule 8003, the U.S. Supreme Court and the Ninth Circuit Court of Appeals

have set forth general principles regarding the interpretation of Federal Rule

of Appellate Procedure 3(c)(1),4 which is similar to Rule 8003(a)(3)(B). See

Smith v. Barry, 502 U.S. 244, 248 (1992); Le v. Astrue, 558 F.3d 1019, 1021-22

(9th Cir. 2009). Although the dictates of FRAP 3 are jurisdictional in nature,



       4
          FRAP 3(c)(1)(B) requires that a notice of appeal "designate the judgment, order,
 or part thereof being appealed."

                                            10
"[c]ourts will liberally construe the requirements of [FRAP] 3" when

determining compliance. See Smith, 502 U.S. at 248.

      When a party seeks to argue the merits of an underlying order that does

not appear on the notice of appeal, the reviewing court will generally

consider (1) whether the intent to appeal a specific judgment is fairly inferred

and (2) whether the appellee will be prejudiced by the mistake. Lolli v. Cty. of

Orange, 351 F.3d 410, 414 (9th Cir. 2003) (interpreting FRAP 3). When

examining both factors, courts should consider "'whether the affected party

had notice of the issue on appeal and, second, whether the party had an

opportunity to fully brief the issue.'" Le, 558 F.3d at 1022 (quoting Meehan v.

Cty. of L.A., 856 F.2d 102, 105 (9th Cir. 1988)). "'Where the appellee has argued

the merits fully in its brief, it has not been prejudiced by the appellant's

failure to designate specifically an order which is subject to appeal.'" Id. at

1025 (quoting Lockman Found. v. Evangelical All. Mission, 930 F.2d 764, 772 (9th

Cir. 1991)).

      First, the Isoms' intent to appeal the Compromise Order can be fairly

inferred. The initial notice of appeal filed on August 5, 2019, states: "The

primary issues on appeal include, but are not limited to: 1. The Court erred

in granting Trustee's Motion to Approve Compromise . . . ." The Isoms' intent

to appeal the Compromise Order is also clear upon review of their opening

brief, which focuses entirely on the errors they assert the bankruptcy court

made in approving the settlement. Leaving aside any timeliness issue, the


                                        11
Isoms' amended notice of appeal, which included the Compromise Order,

further demonstrates their intent to appeal it. Thus, because the Isoms' intent

to appeal the Compromise Order was clear, it gave Trustee and Hall notice of

the issue on appeal. Second, there is no prejudice to Trustee and Hall if we

review the Compromise Order. Both parties had a full opportunity to, and

did, address the order in their appellate briefs.

      Accordingly, we conclude that this appeal encompasses both the

Compromise Order and the Reconsideration Order. We now turn our focus to

the appellees' second argument challenging our jurisdiction, that the appeal is

equitably moot.

B.    The appeal is not equitably moot.

      Trustee and Hall argue that the appeal is equitably moot because the

Isoms failed to seek a stay in a timely manner or obtain one and, as a result,

the settlement has been substantially consummated and would be extremely

difficult to unwind.

      We may dismiss an appeal if we deem it equitably moot. Clear Channel

Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25, 33-35 (9th Cir. BAP 2008).

Equitable mootness is "a judge-made abstention doctrine unrelated to the

constitutional prohibition against hearing moot appeals." Rev Op Grp. v. ML

Manager LLC (In re Mortgs. Ltd.), 771 F.3d 1211, 1214 (9th Cir. 2014). "Equitable

mootness occurs when a comprehensive change of circumstances has

occurred so as to render it inequitable for this court to consider the merits of


                                        12
the appeal. The question is whether the case presents transactions that are so

complex or difficult to unwind that the doctrine of equitable mootness would

apply." Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe Insulation

Co.), 677 F.3d 869, 880 (9th Cir. 2012). In other words, "[e]quitable mootness

concerns whether changes to the status quo following the order being

appealed make it impractical or inequitable to unscramble the eggs." Castaic

Partners II, LLC v. Daca–Castaic, LLC (In re Castaic Partners II, LLC), 823 F.3d

966, 968 (9th Cir. 2016).

      The Ninth Circuit follows a four-step process to determine whether an

appeal is equitably moot:

      We will look first at whether a stay was sought, for absent that a
      party has not fully pursued its rights. If a stay was sought and not
      gained, we then will look to whether substantial consummation of
      the plan has occurred. Next, we will look to the effect a remedy
      may have on third parties not before the court. Finally, we will look
      at whether the bankruptcy court can fashion effective and equitable
      relief without completely knocking the props out from under the
      plan and thereby creating an uncontrollable situation for the
      bankruptcy court.

In re Thorpe Insulation Co., 677 F.3d at 881. Applying this four-factor test, we

conclude that the appeal of the Compromise Order is not equitably moot.

      The Isoms sought, but were unsuccessful at obtaining, a stay of the

Compromise Order from both the bankruptcy court and the BAP. Trustee and

Hall fault the Isoms for not seeking a stay in a more timely manner, waiting

over ten weeks after the Compromise Order was entered. It appears that the

                                        13
delay was due to the Isoms waiting for resolution of their motion to alter or

amend the Compromise Order. Once it was denied, they promptly sought a

stay from the bankruptcy court. And when the court denied the request, the

Isoms promptly sought a stay from the BAP. Under the circumstances, we

believe that the Isoms were diligent in their efforts and did not sit on their

rights. The "failure to obtain a stay does not require a conclusion of equitable

mootness where parties use due diligence in seeking the stay." Id. Thus, this

factor does not weigh in favor of finding the appeal equitably moot.

      We next consider whether substantial consummation of the settlement

has occurred. Although Thorpe focused on plan consummation, we think the

general principles apply to any equitable mootness analysis. See Yang Jin Co.

v. Miller (In re Kong), BAP No. CC-15-1371-KiTaL, 2016 WL 3267588, at *6 (9th

Cir. BAP June 6, 2016) (applying Thorpe to a Rule 9019 settlement); Bonnett v.

Gillespie (In re Irish Pub-Arrowhead, LLC), BAP No. AZ-13-1024-PaKuD, 2014

WL 486955, at *5 (9th Cir. BAP Feb. 6, 2014) (applying Thorpe to a § 363(f) sale

order). Trustee and Hall maintain that the settlement has been substantially

consummated: Hall paid Trustee the $300,000; Trustee transferred deeds for

the rental house and 10-acre parcel to Hall; Trustee transferred and assigned

personal property to Hall; Hall paid a backlog of property taxes owed and

spent significant funds cleaning up and repairing the real estate; Mr. Isom has

been evicted from the 10-acre parcel; Hall leased the farm ground for 2019

and is negotiating a lease for the 2020 growing season; Hall entered into buy-


                                        14
sell agreements for two of the homes, and the sale of the rental house closed

in September 2019. Although the bankruptcy court recently dismissed the

avoidance action against Hall with prejudice, it was only dismissed due to the

settlement and Trustee's and Hall's stipulation. Were we to reverse the

Compromise Order, the adversary proceeding could be revived. In addition,

Trustee has not distributed any of the $300,000 to unsecured creditors.

      At best, this factor is neutral. However, even if it weighs in favor of

mootness, we are still required to look at the third and fourth prongs of the

equitable mootness test. Rev Op Grp. v. ML Manager LLC (In re Mortgs. Ltd.),

771 F.3d 623, 629 (9th Cir. 2014) (substantial consummation does not, by itself,

render an appeal moot, and the appellate court must still consider whether,

despite substantial consummation, it can fashion effective relief).

      The third and fourth Thorpe factors require us to consider the effects of

any available remedy on third parties not before the court and whether such

remedy would create a difficult and essentially unmanageable situation for

the bankruptcy court. As to the third factor, "the question is not whether it is

possible to alter a plan such that no third party interests are affected, but

whether it is possible to do so in a way that does not affect third party

interests to such an extent that the change is inequitable." In re Thorpe

Insulation Co., 677 F.3d at 882. In considering the fourth factor, where the

court can grant some relief, even if such relief is incomplete, the appeal is not

equitably moot. Id. at 883. We conclude that both of these factors weigh


                                        15
against a finding of equitable mootness.

      Because Trustee has not distributed the settlement funds to unsecured

creditors, the only third party possibly affected that is not before us is the

party to whom Hall sold the rental house. The rental house was subject to

liens that Hall acquired from PacifiCorp and was completely underwater.

Instead of Hall having to foreclose, Trustee transferred to Hall the deed for

the property. Hall has not revealed the identity of the third-party purchaser,

or its relationship, if any, to Hall. It is also not clear whether the sale of the

other home has closed or if Hall has entered into a farming lease with anyone

for the 2020 growing season. Thus, the absence of any specifics from Hall

about the purchaser of the rental house or any other potential purchaser(s)

and lessee(s) makes us question whether relief cannot be afforded.

      At bottom, Trustee and Hall have not shown that the bankruptcy court

could not fashion any effective relief without unduly or inequitably

impacting third parties. At the heart of the settlement was the dismissal of the

avoidance action against Hall that sought to avoid the deed-in-lieu and

recover the Farm for the estate. If we were to reverse the Compromise Order

and Trustee were ordered to pursue the litigation and prevailed, the value of

the Farm could be recovered, even if the property itself could not. Even a

partial remedy is sufficient to prevent a case from being moot. Calderon v.

Moore, 518 U.S. 149, 150 (1996).




                                          16
C.    The bankruptcy court did not abuse its discretion in approving the
      compromise.

      1.    Governing law

      Rule 9019 provides that, "[o]n motion by the trustee and after notice and

a hearing, the court may approve a compromise or settlement." The court

may approve a compromise or settlement only when it is "fair and equitable."

In re A & C Props., 784 F.2d at 1381. The settlement should be in the best

interests of the estate and "reasonable, given the particular circumstances of

the case." Id. And while a court generally gives deference to a trustee's

business judgment in deciding whether to settle a matter, the trustee "has the

burden of persuading the bankruptcy court that the compromise is fair and

equitable and should be approved." Id. "Because the bankruptcy judge is

uniquely situated to consider the equities and reasonableness of a particular

compromise, approval or denial of a compromise will not be disturbed on

appeal absent a clear abuse of discretion." United States v. Alaska Nat'l Bank of

the N. (In re Walsh Constr., Inc.), 669 F.2d 1325, 1328 (9th Cir. 1982).

      When deciding the "fairness, reasonableness and adequacy" of a

proposed settlement agreement, the bankruptcy court must consider:

      (a) The probability of success in the litigation; (b) the difficulties, if
      any, to be encountered in the matter of collection; (c) the
      complexity of the litigation involved, and the expense,
      inconvenience and delay necessarily attending it; [and] (d) the
      paramount interest of the creditors and a proper deference to their
      reasonable views in the premises.

                                      17
In re A & C Props., 784 F.2d at 1381. No one factor is dispositive; the "factors

should be considered as a whole to determine whether the settlement

compares favorably with the expected rewards of litigation." Greif & Co. v.

Shapiro (In re W. Funding, Inc.), 550 B.R. 841, 851 (9th Cir. BAP 2016). "When

assessing a compromise, courts need not rule on disputed facts and questions

of law, but rather only canvass the issues. A mini trial on the merits is not

required." Burton v. Ulrich (In re Schmitt), 215 B.R. 417, 423 (9th Cir. BAP

1997).

      2.    Analysis

      The bankruptcy court thoroughly reviewed the evidence and made

detailed findings with respect to each A & C Properties factor.

      For the first factor—probability of success in the litigation—the court

found that it was neutral. In reviewing the elements for avoiding a transfer

under § 548(a)(1)(B) and similar Idaho Code §§ 55-913 and 55-914, the court

determined that it was unclear whether the Isoms received reasonably

equivalent value for the deed-in-lieu given the lease and purchase option.

Insolvency was even more hotly contested by the parties, and the evidence of

the Isoms' insolvency after the deed-in-lieu was "muddied at best." Because of

this, the court determined that it was unclear whether Trustee would succeed

in showing that the Isoms were insolvent or left with an unreasonably small

capital after the deed-in-lieu.

      For the second factor—difficulty in collection—the court found that it


                                        18
weighed against the settlement. The Farm could be brought back into the

estate and sold by Trustee for cash.

      For the third factor—complexity, expense, inconvenience and delay of

litigation—the court found that it weighed in favor of the settlement. Besides

the complex issues of reasonably equivalent value and insolvency, there was

also: (1) the likelihood that Hall would appeal any avoidance judgment and

the interest that would accumulate on the foreclosure judgment while that

appeal was pending; (2) the need to resolve any issues pertaining to lenders

that now held mortgages against the Farm; (3) the need to market and sell the

Farm, which could take months and require the estate to bear costs of sale of

up to 5%; (4) the need to determine proper figures for the tax basis and net

operating loss ("NOL") once the Farm sold; (5) the issue of Hall's claims

coming back into play if the deed-in-lieu was avoided and the litigation that

may result in resolving some or all of those claims; and (6) the fact that any

non-prevailing party could appeal any final order on the above issues causing

further delay in the administration of the estate.

      Lastly, the court found that the fourth factor—paramount interest of

creditors—weighed in favor of the settlement. The court noted that under the

terms of the settlement agreement, administrative claims and non-Hall

creditors would be paid in full, and Hall's subordinated claims could be paid,

at least in part, with any funds remaining. Furthermore, if the settlement

were not approved, it was not clear when or how much creditors would


                                       19
receive on their claims. Even if the Isoms were correct that they would fare

better with Trustee pursuing the avoidance action and selling the Farm, they

were not a creditor. Thus, the court concluded that it did not have to consider

their interests under A & C Properties.5

      The Isoms assign several errors by the bankruptcy court in approving

the settlement, many of which go to the court's findings of fact and their

disagreement with how it weighed the evidence. We address their arguments

in turn.

      First, the Isoms argue that the bankruptcy court erred in finding that



        5
           We do make one observation about the bankruptcy court's ruling that the
 debtor's interest is not something that must be considered under the fourth A & C
 Properties factor in approving a settlement. While that may be "technically" true, where
 there are surplus funds, the trustee also owes a fiduciary duty to the debtor. See Wisdom
 v. Gugino, 649 F. App'x 583, 584 (9th Cir. 2016) ("When a debtor retains an interest in
 estate assets — either by properly claiming exemptions or because surplus property
 will remain in the estate after all creditors have been compensated — the trustee
 owes a fiduciary duty to the debtor as well.") (emphasis added); Stoll v. Quintanar (In
 re Stoll), 252 B.R. 492, 495 n.4 (9th Cir. BAP 2000) ("When as in this case an estate will
 have a surplus that will be returned to the debtor after all of the creditors have been
 paid in full, the debtor has an economic interest in the estate that is similar to that held
 by the creditors who will be paid from the estate.").

         Because this was potentially a surplus case, the bankruptcy court was required to
 also consider the Isoms' best interest in approving the settlement. Despite its statement
 to the contrary, the court did engage in that analysis and concluded that settlement as
 opposed to litigation was in their best interest. It found that the existence of a seven-
 figure payoff to the Isoms was speculative and not a legitimate basis upon which to
 reject the settlement. The court noted, while it might be fair and equitable to reject a
 settlement if a competing path would result in a clear benefit to the debtor, this was not
 that case. We perceive no error here.

                                              20
Trustee exercised due diligence and complied with the business judgment

rule. For example, they argue that Trustee failed to ascertain the full value of

the Farm and to investigate potential offers for the sale of the property. They

argue that Trustee failed to follow up on an offer from Riverbend to purchase

the Farm for $13 million. As the bankruptcy court noted, Riverbend's letter

expressing interest in purchasing the Farm was merely a non-binding letter of

intent, not an actual offer accompanied with earnest funds. Further, contrary

to the Isoms' assertion, Trustee testified that he did follow up on the letter,

but Riverbend, who is a neighbor of the Isoms and possibly an insider, never

responded. On that same note, the Isoms also complain that Trustee's costs of

sale figure of 5% was pure speculation and unsupported, especially when

Riverbend was interested in purchasing the Farm in a private sale without a

broker. Again, the bankruptcy court believed that costs of sale of "up to 5%"

was plausible considering that the Riverbend letter was not an actual offer.

These findings are not so illogical or implausible as to constitute clear error.

      Next, the Isoms argue that Trustee failed to investigate the Farm's tax

basis and whether or not there was an NOL. These two issues were hotly

contested by the parties. In its discretion, the court chose to give more

credence to Trustee's asserted NOL and tax basis analysis. As the court

correctly noted, this was not a mini trial on the merits of the avoidance action.

That the Farm's tax basis in particular was so heavily contested only showed

the court that Trustee would have to invest further time and resources to


                                        21
determine the proper amount in the event of a sale. In any case, the issues of

sales price, the amount of a broker commission, tax basis and NOL were just

some of the many factors for the court to consider in deciding if the proposed

settlement was fair and reasonable and in the best interest of the estate.

      The Isoms also argue that the bankruptcy court erred by considering

only balance-sheet insolvency under § 548(a)(1)(B)(ii)(I) and ignoring the

other factors in § 548(a)(1)(B)(ii)(II) and (III) to determine that Trustee would

not be successful in avoiding the deed-in-lieu. The bankruptcy court did

consider the other factors in § 548(a)(1)(B)(ii)(II) and (III). After finding that

evidence of the Isoms' insolvency was "muddied at best," the court found that

it was "unclear" whether Trustee could establish their insolvency, or that they

were left with an unreasonably small capital after the deed-in-lieu. While the

court did not specifically discuss (III)—that the Isoms were unable to pay

their debts as they came due—the Isoms do not explain how this would

change the outcome. What matters here is that the court found that the issue

of their solvency was not clear, would be vigorously contested, and this fact

added to the complexity of the litigation and the expense, delay and

inconvenience necessarily attending it.

      Next, the Isoms argue that the bankruptcy court's concern about

accruing interest on Hall's secured debt if the settlement was not approved

was misplaced. They maintain that under § 550(e)(1), rents Hall received

during the pendency of the case are profits that would offset any accruing


                                         22
interest that would accumulate while the case and any appeals were pending.

The court concluded that rents Hall received likely exceeded any

improvements or expenses incurred and therefore precluded a § 550(e)(1)

claim. However, that did not resolve the issue that if Hall's secured claim was

revived, interest was accruing at over $1 million per year, the parties had

already been litigating for four years, and interest would continue to accrue

on the debt during the pendency of an appeal. In essence, the interest accrual

would wipe out any potential surplus gained from litigation if Trustee

prevailed. The Isoms apparently disagree. In any event, the court did not

need to determine this legal issue for purposes of approving a settlement

under Rule 9019. It was sufficient that the court recognized that the issue of

accrued interest added to the complexity, expense, inconvenience and delay

of litigation.

      The Isoms next argue that the bankruptcy court erred by not

considering the fraudulent conveyance implications of the deed-in-lieu under

the Idaho state law statutes, namely Idaho Code §§ 55-901 through 55-909.

The court did not need to consider these statutes, because they apply to actual

fraudulent transfers of either real or personal property. The Isoms did not

plead any facts to support a claim for actual fraud as required by Civil Rule 9,

nor did they present any evidence of actual fraud at the evidentiary hearing

on the settlement. The Isoms cannot use this appeal as an attempt to amend

their complaint, which is now under Trustee's control.


                                       23
      Lastly, the Isoms argue that the bankruptcy court erred by failing to

consider the standards for the sale of an estate asset under § 363(b). While this

argument has some facial appeal because there was a sale component to

the compromise, we disagree that the court did not consider this in its

analysis.

      Because "the disposition by way of compromise of a claim that is an

asset of the estate is the equivalent of a sale of the intangible property

represented by the claim," a Rule 9019 compromise can "simultaneously

implicate[] the sale provisions under section 363 as implemented by Rule

6004 and the compromise procedure of Rule 9019(a)." In re Mickey Thompson

Entm't Grp., Inc., 292 B.R. at 421. "When confronted with a motion to approve

a settlement under Rule 9019(a), a bankruptcy court is obliged to consider, as

part of the fair and equitable analysis, whether any property of the estate that

would be disposed of in connection with the settlement might draw a higher

price through a competitive process and be the proper subject of a section 363

sale." Id. at 421-22. Whether to impose formal sale procedures, however, is

ultimately a matter of discretion that depends on the dynamics of the

particular situation. Id. at 422. See also Adeli v. Barclay (In re Berkeley Del. Ct.,

LLC), 834 F.3d 1036, 1040 (9th Cir. 2016). In other words, the court need not

implement bidding procedures and an auction if the case does not call for it.

Sterling v. Green (In re Esterlina Vineyards & Winery, LLC), BAP No. NC-16-

1428-TaBS, 2018 WL 1354331, at *4 (9th Cir. BAP Mar. 13, 2018).


                                           24
      The Isoms argue that the bankruptcy court erred by failing to analyze

whether any property of the estate that was being disposed of in the

settlement—i.e., the "millions of dollars in equity" in the Farm—might draw a

higher price through a competitive process and be the proper subject of a sale

under § 363(b). While the Isoms continue to focus on the value of the Farm as

their gauge, the real issue here is what was the value of the avoidance action

claim against Hall, the estate's disputed interest in Aladdin's Flowers, and the

other purported estate assets that were subject to an ownership claim or lien

by Hall—the Palisades Water Shares, the irrigation handlines and the air

tubes. The motion to compromise was served on all creditors. The only

opposition was filed by the Isoms. They did not make an offer to purchase the

avoidance action claim, or the disputed interest in Aladdin's Flowers, or the

other purported assets. There were no other bids.

      This is not a situation like Mickey Thompson, where there was a

competing higher bid and a trustee who thought that an auction might be

beneficial but felt he was contractually bound by the proposed settlement

agreement. And, unlike Mickey Thompson, there were actual "compromise"

aspects to the settlement agreement; it was not merely a sale of an estate asset

to the settling party disguised as a compromise. 292 B.R. at 420-21. While the

bankruptcy court did not make any specific § 363(b) findings, it did find as

part of its "fair and equitable" analysis under A & C Properties that the

complexity of the litigation and the difficulty with prevailing on the


                                        25
avoidance action claim was created by the Isoms, who only amended

schedules to list assets after they were discovered by Trustee, failed to turn

over assets under a court order, and intentionally destroyed business records

by setting them on fire. The court also carefully analyzed the value to the

estate of each of the other assets that were transferred to Hall. It found that

each was the source of continuing litigation and heavily disputed, including

Aladdin's Flowers, where the amount of Mr. Isom's ownership interest in the

entity was in dispute. Therefore, given the record, there is no basis to believe

that an auction would have resulted in more value for the estate.

      Despite the Isoms' arguments to the contrary, we conclude that the

record amply supports the bankruptcy court's decision to approve the

compromise.

D.    The Isoms have waived their appeal of the Reconsideration Order.

      Even though the Isoms appealed the Reconsideration Order, they did

not provide any argument on the issue in their opening brief. Accordingly, it

has been waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) ("[O]n

appeal, arguments not raised by a party in its opening brief are deemed

waived."). However, even if we had reviewed the matter, we would have

found no abuse of discretion by the bankruptcy court in denying the motion

to alter or amend. The motion was essentially a rehash of the issues that had

been fully briefed, litigated, and considered by the court in approving the

compromise.


                                        26
                          VI. CONCLUSION

     For the reasons stated above, we AFFIRM the Compromise Order and

we AFFIRM the Reconsideration Order.




                                  27
