[00:00:00] Speaker 01:
In Re, Homesite Holdings, LLC.

[00:00:03] Speaker 01:
K. Todd Curry, Council for Appellant, Homesite Holdings, LLC.

[00:00:10] Speaker 01:
Michael Subkoviak, Council for Appellees, SMDL, LLC, and T2, LLC.

[00:00:20] Speaker 01:
Christopher R. Nelson, Council for Appellee, Hushang Efremian.

[00:00:27] Speaker 00:
All right, good morning.

[00:00:29] Speaker 00:
So we've got two appellees in this matter.

[00:00:32] Speaker 00:
So you folks are going to have 15 minutes total.

[00:00:36] Speaker 00:
So you should think about how you want to split up your time.

[00:00:39] Speaker 00:
And you can let me know when it's your time to speak.

[00:00:44] Speaker 00:
But Mr. Curry, you're up first.

[00:00:46] Speaker 00:
So why don't you let us know if you want to reserve any time for rebuttal?

[00:00:52] Speaker 03:
Yes, Your Honor.

[00:00:53] Speaker 03:
I would like to reserve five minutes, please.

[00:00:56] Speaker 00:
All right.

[00:00:57] Speaker 03:
Thank you.

[00:00:57] Speaker 03:
Please begin.

[00:00:59] Speaker 03:
Thank you.

[00:01:01] Speaker 03:
Good morning and may it please the court.

[00:01:04] Speaker 03:
My name is Todd Curry and I'm representing the Appellant Homesite Holdings LLC.

[00:01:10] Speaker 03:
By way of overview, Bankruptcy Court cared because it proved the sale of real property without sufficient evidence that the optimal value for the property was being obtained.

[00:01:20] Speaker 03:
The property was sold for $338,000.

[00:01:22] Speaker 03:
There was not evidence to support that value.

[00:01:26] Speaker 03:
In addition, there was not evidence that what marketing efforts were undertaken to sell the property.

[00:01:32] Speaker 03:
The court also cared by crediting a $6 million of claims by SMDLT2 that were barred as a matter of law.

[00:01:41] Speaker 03:
The court should have granted homesites motion for summary judgment as to those claims and in the court

[00:01:47] Speaker 03:
should have denied the sale motion at least at a minimum or at best because the motion was then premature.

[00:01:55] Speaker 03:
The court also erred by finding good faith on the part of the purchaser and the court also erred by not granting reconsideration when homesite presented to the court evidence that the sale process was infected by inaccurate information submitted by SMBL and T2.

[00:02:16] Speaker 03:
I would like to jump right to the good faith issue, because I think that's really the most unusual aspect about this case.

[00:02:25] Speaker 03:
It's something we don't really see that often.

[00:02:28] Speaker 03:
There was substantial misconduct by the purchaser, SMDLT2, in connection with the sale proceeding.

[00:02:37] Speaker 03:
SMDLT2 represented to the bankruptcy court that there were all sorts of problems with home sites retaining law, which was below their property.

[00:02:46] Speaker 03:
But on the other hand, they secretly told the California Coastal Commission something entirely different, which is that they wanted to do a new and different remedy to their property up above that essentially assumed that the homesite wall was stable and would provide stability for this new so-called Teco mesh system that they wanted to install.

[00:03:08] Speaker 00:
This is going to your motion for reconsideration, right?

[00:03:12] Speaker 00:
Because this was not part of the record for

[00:03:16] Speaker 00:
the global settlement and sale motion that the court granted, right?

[00:03:22] Speaker 03:
This was part of the reconsideration.

[00:03:24] Speaker 03:
That's correct, Your Honor.

[00:03:25] Speaker 00:
So what you need to really focus on then is why the court erred in not reconsidering it in order for us to even think about this issue.

[00:03:37] Speaker 03:
Yes, and it was the misconduct by SMDLT2 that really, and this was discovered after the motion was granted, the misconduct that is, and by concealing in discovery this information that they had provided to the Coastal Commission,

[00:03:55] Speaker 03:
They essentially didn't even, what this showed was they did not even believe what they were telling the bankruptcy court.

[00:04:02] Speaker 03:
That is that the homesite law supposedly was unstable and needed to be replaced and was not worthy of providing support.

[00:04:11] Speaker 03:
So that I think is key evidence that was withheld.

[00:04:15] Speaker 03:
It was withheld in discovery.

[00:04:16] Speaker 03:
Homesite had propounded discovery that clearly covered this type of evidence that was withheld.

[00:04:21] Speaker 03:
then what they did.

[00:04:22] Speaker 06:
Council, wasn't the judges finding that all of this report was public record and could have been obtained by you much earlier than the time that you alleged you did.

[00:04:33] Speaker 06:
That was one of the bases on which she denied the motion for reconsideration was it wasn't newly discovered evidence and

[00:04:40] Speaker 06:
Doesn't all of the things that you're suggesting that the report says depend upon an interpretation of the report by experts who then have to testify and be believed, and they, T2M or SMDL T2, contests that that is not exactly how it should be interpreted.

[00:04:57] Speaker 06:
And so those are factual questions.

[00:04:59] Speaker 06:
I mean, isn't all that part of the problem that you face in this case?

[00:05:03] Speaker 03:
Well, the Bankruptcy Court did state that it felt that this was public information.

[00:05:10] Speaker 03:
This is not like a title dispute case where the parties can just look in the public record and find deeds recorded.

[00:05:17] Speaker 03:
This is information that is with the Coastal Commission.

[00:05:21] Speaker 03:
It is not just readily available online.

[00:05:23] Speaker 03:
My client found that, in fact, anything that was pending was not available unless you specifically knew to call the Coastal Commission and ask for something specific.

[00:05:32] Speaker 03:
We had covered this, we just thought, by propounding discovery that covered this area.

[00:05:37] Speaker 03:
This was deliberately withheld in discovery.

[00:05:40] Speaker 03:
Now, your honor raises a point about, well, does it make a difference?

[00:05:43] Speaker 03:
Does it require experts to tell us that it would have made a difference?

[00:05:46] Speaker 03:
Under Rule 60, we don't have to show, and it can often be impossible to show,

[00:05:51] Speaker 03:
Or what would have happened and we have the information.

[00:05:54] Speaker 06:
So I'm referring to the fact that you're suggesting that the the report itself establishes

[00:06:02] Speaker 06:
that they knew and represented something false to the court.

[00:06:05] Speaker 06:
And that requires evidence that, in fact, you can interpret it that way.

[00:06:10] Speaker 06:
They deny that it's interpreted that way.

[00:06:13] Speaker 06:
They aren't suggesting that they are using the retaining wall in the same way that you're suggesting.

[00:06:17] Speaker 06:
They aren't suggesting that what they did was contrary to what they represented.

[00:06:22] Speaker 06:
Those things make the question of whether she made the correct decision

[00:06:30] Speaker 06:
not as obvious as you're suggesting it would be in the absence of those problems.

[00:06:35] Speaker 03:
I understand that, Your Honor.

[00:06:37] Speaker 03:
And we're not required to show that at this point.

[00:06:40] Speaker 03:
What we're required to show is that what they did impaired our ability to present our case.

[00:06:45] Speaker 03:
And what they've blocked us, what they've blocked home site from doing, was presenting the fact that they didn't even believe what they were telling the court as far as the stability of that law.

[00:06:55] Speaker 03:
And the bankruptcy court credited their argument

[00:06:58] Speaker 03:
and found as a way to get around the permanent nuisance, three-year statute of limitations, that there was a question about whether the wall in fact was stable.

[00:07:07] Speaker 03:
So it goes right to the heart of the case.

[00:07:09] Speaker 03:
And so again, we don't have to show at this point that it would have made a difference.

[00:07:14] Speaker 03:
What we have to show is that it blocked us.

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And what it blocked us from doing was conducting further discovery.

[00:07:19] Speaker 03:
It blocked us from having our experts look at this.

[00:07:21] Speaker 03:
It blocked us from having

[00:07:22] Speaker 03:
getting to depose their experts on this very issue as to whether or not they truly believed that that homesite wall was unstable.

[00:07:31] Speaker 03:
And that, I think, is the essence of a Rule 60 motion here, is that it blocked us from presenting the case that we would have or could have presented.

[00:07:41] Speaker 03:
And I think it's important to emphasize what clearly was false that they told the court.

[00:07:47] Speaker 03:
Number one, what they did is they told the court that they had submitted a September application

[00:07:51] Speaker 03:
when in fact they had submitted a superseding October application that we discovered by accident with the Coastal Commission.

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So that was one.

[00:08:01] Speaker 03:
So they had switched that out and used the October application.

[00:08:03] Speaker 03:
The other thing they told the court, they were pursuing a 2019 repair bid of around $3.8 million.

[00:08:11] Speaker 03:
when in fact, secretly with the Coastal Commission, they were pursuing a wholly new TecoMesh system dated 2022.

[00:08:18] Speaker 03:
Now, why would they tell the bankruptcy court they were pursuing the 2019 remedy when in fact they had abandoned that remedy and they were pursuing a 2022 TecoMesh system?

[00:08:29] Speaker 03:
Again, do we have to prove at this stage that that would have made a difference?

[00:08:34] Speaker 03:
No, and it's hard to do that without conducting the discovery that this would have led to.

[00:08:38] Speaker 03:
And so I think that's the key under the Rule 60 analysis.

[00:08:41] Speaker 02:
Counsel, you know, under 60B, you're going to have to show that this newly discovered evidence could not have been discovered with reasonable diligence.

[00:08:58] Speaker 02:
Tell me why Judge Mann was wrong in concluding that you couldn't have discovered.

[00:09:05] Speaker 02:
that you could have discovered this with reasonable diligence.

[00:09:09] Speaker 03:
Your Honor, because under Judge Mann's point of view, we would have had to have checked with the Coastal Commission on a daily or weekly basis to see if something new was being filed with them.

[00:09:20] Speaker 03:
That's simply not practical.

[00:09:21] Speaker 03:
And so what we did, and this is what discovery is for, is we propounded discovery that we believe, and in fact did cover this area, any contacts with third parties about these properties and changes to the properties.

[00:09:33] Speaker 03:
And we relied on the discovery statutes and the obligation to something.

[00:09:38] Speaker 02:
You say on a daily basis though, the report that you're referring to that you're opposing side, it wasn't filed a day before you discovered it.

[00:09:51] Speaker 03:
That's true.

[00:09:53] Speaker 03:
How long was it there?

[00:09:54] Speaker 03:
The first one apparently was filed in September.

[00:09:57] Speaker 03:
The second was filed in October.

[00:09:58] Speaker 03:
And we were before the court in January.

[00:10:01] Speaker 03:
I think we discovered it in February.

[00:10:03] Speaker 03:
So I think that's what the timing was.

[00:10:05] Speaker 02:
So it's not a daily basis.

[00:10:07] Speaker 02:
You wouldn't have had to do it.

[00:10:09] Speaker 02:
You could have almost done it on a quarterly basis.

[00:10:12] Speaker 03:
Perhaps.

[00:10:12] Speaker 03:
Perhaps.

[00:10:13] Speaker 03:
And I guess the question is, are we entitled to rely on our discovery?

[00:10:17] Speaker 03:
And are we entitled to rely on the representations being made

[00:10:20] Speaker 03:
in papers filed by SMDLT2 that they're pursuing the old repair, declarations under penalty of perjury.

[00:10:28] Speaker 03:
Can we rely on those or do we have to constantly be checking quarterly or whatever it is to see if they were lying or making false representations about what in fact they were pursuing?

[00:10:39] Speaker 03:
So I think that really taints the sale process here.

[00:10:44] Speaker 06:
This isn't really a sale, is it?

[00:10:46] Speaker 06:
It's a global settlement.

[00:10:48] Speaker 06:
It involves multiple parties with claims against the estate, who are either modifying their claims or waiving portions of them.

[00:10:54] Speaker 06:
It isn't the estate recovering money by settling a claim it has against somebody else.

[00:11:03] Speaker 06:
which is the typical sale 363 in a 90-19 scenario, right?

[00:11:09] Speaker 06:
That's not what's going on here.

[00:11:11] Speaker 03:
Well, I believe there was cash generated for the estate as well out of the 338,000.

[00:11:14] Speaker 06:
I appreciate that, but the sale is only a small component of an overall global settlement amongst the framian, T2 and SMDL, the trustee,

[00:11:29] Speaker 06:
So it's not just limited to a sale of the real property.

[00:11:32] Speaker 06:
That's not what's just occurring here.

[00:11:34] Speaker 06:
It's an overall sale.

[00:11:39] Speaker 03:
Yes, there were settlements as well.

[00:11:40] Speaker 03:
And from my client's perspective, though, the sale was the bigger component because my client's opinion of value was $3.8 million.

[00:11:46] Speaker 03:
The trustee, and that brings up the other issue here, another issue here, which is, was there sufficient evidence of the $338,000 sale price to support that?

[00:11:55] Speaker 03:
And the trustee submitted no evidence on that point, did not explain what marketing had taken place.

[00:12:00] Speaker 03:
He just said, well, I tried to market it.

[00:12:02] Speaker 06:
But that's because you want to focus on the sale.

[00:12:05] Speaker 06:
Um, talk about the global settlement and how that fell into the, how she abused her discretion and how you addressed it in your briefing on the global settlement resolution.

[00:12:15] Speaker 06:
Explain that to me, not just that she doesn't qualify into 363 and you think the sale price is too low.

[00:12:21] Speaker 03:
Well, with respect to the settlement, uh, the

[00:12:23] Speaker 03:
The bankruptcy court should have granted the summary judgment motion based on the statute of limitations, for example.

[00:12:28] Speaker 03:
And therefore, when we look at the element of the factors for the settlement, we have to look at the merits of the litigation, the likelihood of success.

[00:12:39] Speaker 03:
And our analysis is that this claim clearly was barred by the three-year statute of limitations for permanent nuisance.

[00:12:45] Speaker 03:
It also was barred on the three year, even if this were a continuing nuisance, we have the problem of the only damages recoverable by the plaintiff here would have been damages occurring in the last three years before the suit was filed.

[00:12:58] Speaker 03:
So that was 2018 to 2021.

[00:13:01] Speaker 03:
There was no evidence whatsoever.

[00:13:02] Speaker 03:
And again, it's plain as burden to provide this.

[00:13:06] Speaker 03:
There was no evidence as to what those damages were.

[00:13:08] Speaker 03:
So the court's analysis of the likelihood of prevailing in the litigation was flawed in that regard, as a matter of law.

[00:13:16] Speaker 06:
Because she rejected your arguments on summary judgment,

[00:13:20] Speaker 06:
she had a sufficient basis to find that there was a dispute that would require extensive further litigation.

[00:13:28] Speaker 06:
And in fact, your client suggested that if they could have got their bid

[00:13:33] Speaker 06:
successfully, they would have just continued the litigation against T2NS MDL in the future.

[00:13:40] Speaker 06:
That's what he anticipated doing.

[00:13:42] Speaker 06:
So this global settlement wasn't just based on some theory that she didn't agree with.

[00:13:49] Speaker 06:
She saw this as a long haul situation that would take years to resolve, that had been years in the making and hadn't yet resolved.

[00:14:00] Speaker 03:
Well, we didn't see it that way, Your Honor, because we saw it as it was a clear case that the claims were in fact barred and should not have been credited at all.

[00:14:06] Speaker 03:
So there would not have been continued litigation going forward, had the summary judgment been granted.

[00:14:13] Speaker 03:
I'd like to reserve the rest of my time, please.

[00:14:18] Speaker 00:
Thank you.

[00:14:19] Speaker 00:
All right, Mr. Sapkowiak and Mr. Nelson, who's going to speak first and how are you going to divide your time?

[00:14:28] Speaker 05:
I will reserve five minutes for Mr. Nelson.

[00:14:35] Speaker 05:
Okay.

[00:14:38] Speaker 05:
May it please the court, Michael Cikowiak appearing on behalf of Appellees S&DL and T2.

[00:14:44] Speaker 05:
This appeal concerns the sale of landsite property requiring slope failure remediation.

[00:14:49] Speaker 05:
The Bankruptcy Court approved settlement resolved three years of bankruptcy litigation, removed dangerous property from the bankruptcy estate, and put the bankruptcy trustee in position to close the case.

[00:15:01] Speaker 05:
The Bankruptcy Court's orders on appeal are well-reasoned and detailed, totaling nearly 40 pages in length.

[00:15:08] Speaker 05:
They should be affirmed.

[00:15:08] Speaker 05:
I'll first discuss the settlement and sale motion.

[00:15:13] Speaker 05:
No one contends the Bankruptcy Court applied to a legal standard.

[00:15:18] Speaker 05:
The issue on appeal is whether the sale price for the property is factually supported, even without a precise valuation due to landslide risks.

[00:15:27] Speaker 05:
The bankruptcy court determined that value is a disputed fact, and the property is worth between next to nothing, and the appellant's $3.8 million figure.

[00:15:37] Speaker 00:
We don't get there, though, unless we get past the good faith issue, though, if we're talking about the sale.

[00:15:42] Speaker 00:
Isn't that correct, Mr. Sapkowiak?

[00:15:46] Speaker 05:
I'm sorry, I don't fully understand.

[00:15:50] Speaker 00:
Well, if we're just looking at it as a 363 sale, and you got a good faith finding,

[00:15:58] Speaker 00:
All we can review on appeal with respect to that is the good faith, right?

[00:16:03] Speaker 00:
The sale price does, we can't get to it unless we find that there was an error in determining good faith.

[00:16:11] Speaker ?:
Correct.

[00:16:13] Speaker 05:
And we believe that the court correctly terminated that there was a good faith purchase yard.

[00:16:19] Speaker 00:
Right, but what about Mr. Curry's argument that your client hid evidence regarding the

[00:16:27] Speaker 00:
stability of the hillside and that you were pursuing a different route.

[00:16:34] Speaker 05:
Oh, yes, your honor.

[00:16:37] Speaker 05:
We don't view it as hiding evidence.

[00:16:39] Speaker 05:
It was an oversight.

[00:16:41] Speaker 05:
It was a failure to supplement discovery responses.

[00:16:44] Speaker 05:
There was nothing nefarious about it.

[00:16:47] Speaker 05:
But the court denied the motion for reconsideration, and it was correct that the landslide needs a repair of some type, and correctly felt that the parties diverged in a type of repair needed and who was liable.

[00:17:03] Speaker 05:
And that's directly to the issue that Mr. Curry raises now, so it doesn't resolve Section 363 on good faith finding.

[00:17:13] Speaker 05:
The bankruptcy court correctly noted that S&DL and T2's incomplete document production and the evidence submitted by appellants to the court in support of the motion did not change as critical fact.

[00:17:24] Speaker 05:
and the bankruptcy court was correct in finding appellants conceal an argument unpersuasive, as the bankruptcy court stated in its order denying reconsideration.

[00:17:33] Speaker 05:
Homesite, in effect, asks the court to ignore all contrary evidence in the record that both parties are liable for some extent for the landslide.

[00:17:43] Speaker 05:
The bankruptcy court was concerned about public safety and found the evidence presented confirms the court's reasoning for entering in orders in the first place.

[00:17:52] Speaker 05:
And the court was,

[00:17:53] Speaker 05:
It's not true to say the court was misled by the discovery oversight.

[00:18:08] Speaker 00:
All right, proceed.

[00:18:10] Speaker 05:
Thank you, Your Honor.

[00:18:14] Speaker 05:
So I was talking about the sale price, and the bankruptcy court reasonably concluded that a precise value of the property could not be determined without resolution or disputed factual issues as the scope of the landslide, the cost to remediate, and respective liabilities of the parties.

[00:18:29] Speaker 05:
And the settlement, as Judge Geya noted earlier, resolves extensive and uncertain litigation.

[00:18:37] Speaker 05:
And as part of the settlement terms, SMDL and T2 paid $488,000.

[00:18:42] Speaker 05:
Now Mr. Curry has put that number significantly lower, and we addressed this in our briefing, and it overlooks that we had made a $150,000 loan to the estate that it's not accounted for, that we waived that.

[00:18:58] Speaker 05:
The bankruptcy court did not abuse the discretion in approving the sale price.

[00:19:03] Speaker 05:
On the other hand, appellate's contention that property is worth $3.8 million is objectively illogical and without support.

[00:19:11] Speaker 05:
It is disingenuous for appellates to argue the sale price was too low when the only other offer was appellate's $50,000 overbid that was deemed less favorable by creditors.

[00:19:22] Speaker 05:
The minimal overbid about is strong evidence of the property value.

[00:19:25] Speaker 06:
But in fact, didn't the judge struggle with the overbid because she didn't know how to compare what the $50,000 would mean when all of the other components of the settlement weren't addressed by the overbid?

[00:19:38] Speaker 06:
Yes, that's exactly true.

[00:19:41] Speaker 05:
The overbid was designed to perpetuate the litigation

[00:19:47] Speaker 05:
at the same time only increasing the amount paid to the estate and to Mr. Aframian of $25,000.

[00:19:55] Speaker 05:
Both creditors decided that that was not worthwhile to them and that they preferred the SMDLT2 proposal.

[00:20:07] Speaker 05:
I'd like to discuss the reasons for the bankruptcy court granting the sale motion.

[00:20:12] Speaker 05:
The settlement sale resolve complex litigation avoids further landslide risk faced by the estate and provided cash to creditors.

[00:20:21] Speaker 05:
Appellants incorrectly conclude the settlement cannot be approved if the motion for summary judgment is granted.

[00:20:27] Speaker 05:
We think the bankruptcy court's denial of the motion for summary judgment is not issued determinative for this appeal.

[00:20:34] Speaker 05:
The bankruptcy court could have approved the subtle in sale even if it had granted appellate's motion for summary judgment.

[00:20:41] Speaker 05:
The bankruptcy court identified no fewer than three reasons for granting the sale motion that are independent of the motion for summary judgment.

[00:20:49] Speaker 05:
Pardon me.

[00:20:55] Speaker 05:
First, the bankruptcy court discussed in its challenge orders that the trustee use excellent business judgment in seeking approval of the settlement and sale, which shields the estate from potential liability from the landslide risk.

[00:21:09] Speaker 05:
The court discussed, quote, alarm about the prospect of the landslide falling even more and that waiting will exacerbate the problem.

[00:21:19] Speaker 05:
Second, the chapter seven process worked here.

[00:21:22] Speaker 05:
By resolving the $1.2 million Aframian lien necessary for sale of the property and enabling the resolution of a documented hazardous landslide condition, appellants try to minimize this important point.

[00:21:37] Speaker 05:
The property would remain unmarketable without the settlement approved by the bankruptcy court.

[00:21:42] Speaker 05:
There would be no agreement with Mr. Aframian.

[00:21:45] Speaker 05:
There would be no ability to sell the property.

[00:21:49] Speaker 05:
Third, the Bankruptcy Court found that approving the settlement avoids more litigation and the risk the estate will be further administratively insolvent.

[00:21:58] Speaker 05:
The only competing proposal was more expensive litigation and the case remaining open for an indefinite period.

[00:22:05] Speaker 05:
Creditors showed a clear preference for the settlement with S&D LT2.

[00:22:10] Speaker 05:
The bankruptcy court expressed that the motion for summary judgment was a valuable exercise for determining the potential range of value for the property.

[00:22:19] Speaker 05:
But to say the settlement would not be approved if the motion for summary judgment was granted is simply not supported by the record.

[00:22:30] Speaker 05:
I think I'll reserve the rest of the time for Mr. Nelson.

[00:22:34] Speaker 05:
Thank you.

[00:22:35] Speaker 05:
Unless the court has any questions.

[00:22:38] Speaker 00:
Uh, no questions for you, Mr. Judge Corbett.

[00:22:41] Speaker 00:
No.

[00:22:42] Speaker 00:
All right.

[00:22:43] Speaker 00:
Uh, Mr. Nelson.

[00:22:44] Speaker 04:
Thank you, Your Honor.

[00:22:45] Speaker 04:
Good morning and may it please the Court, uh, I represent, uh, Secured Creditor and Appellee Bhushan Gafferamian.

[00:22:52] Speaker 04:
Uh, I think I would just go straight into actually discussing what Judge Gann mentioned, which is that

[00:22:59] Speaker 04:
When we look at this sale, and if you look at the sale in the context of it's just a vacuum of the property value itself, you're not really paying attention to what the court was considering as a global settlement, and also really what was kind of driving the entirety of the motion, including 363 and rule 1919 aspects as well.

[00:23:21] Speaker 04:
I think one of the biggest pieces of semantics we've heard here is that

[00:23:26] Speaker 04:
there wasn't sufficient value or there wasn't optimal value of the property.

[00:23:31] Speaker 04:
That's not the correct question.

[00:23:33] Speaker 04:
Semantically, the question is whether there's optimal return for creditors of the estate.

[00:23:38] Speaker 04:
And the settlement, which includes certainly discounts on claims, must be factored into the price under 363.

[00:23:48] Speaker 04:
In this case, my client had a $1.2 million claim that had ballooned quite a bit based on interest.

[00:23:54] Speaker 04:
The fact of the matter is that claim still accrues, it's still going to be sitting there, and it's still going to be a serious impediment to the administration of the estate.

[00:24:02] Speaker 04:
And so because of that,

[00:24:04] Speaker 04:
When we look at the overall considerations for a settlement, the fact is the bankruptcy court isn't required to sit there and conduct a mini trial.

[00:24:11] Speaker 04:
All she needed to do was canvas the issues and figure out what would be a good way to settle things efficiently, because we're not really interested in spending a lot of money litigating further cases.

[00:24:24] Speaker 04:
This thing had been dragging on for years.

[00:24:27] Speaker 04:
And so the fact is, I think all of the creditors, at least in their consideration, were heavily considering the fact that there was more litigation being promised and no certainty through a settlement with the debtor and the debtor's principle.

[00:24:44] Speaker 04:
However, SMDL and T2 offered certainty, and that was something that was very important to all the creditors of the estate, particularly my client, as expressed in its briefing.

[00:24:54] Speaker 04:
So I think here the court properly mandated, properly canvassed all of the creditors.

[00:24:59] Speaker 04:
It considered all of the factors that go into pricing.

[00:25:02] Speaker 04:
The value of the property itself was not the sole consideration of the 363 or 1919 motions.

[00:25:09] Speaker 04:
And frankly, not bringing up my client's point of view as the single largest creditor of the estate was a pretty serious oversight by the appellant because

[00:25:22] Speaker 04:
We are really the most important party to be considered, at least as this canvassing process is concerned.

[00:25:29] Speaker 04:
We offered the greatest value through discount of anyone.

[00:25:33] Speaker 04:
And the fact is, someone came in and wanted to buy this property that my client, under its consideration, which under the AC factors must be considered, my client's consideration was that that offer was the best offer and represented a fair value.

[00:25:52] Speaker 04:
So with that, I would just open myself to questions if the court has any.

[00:25:58] Speaker 00:
So in your view, it looks like the appellant is saying the sale is the driver here of this transaction, right?

[00:26:07] Speaker 00:
But your view is that it really was all about a settlement.

[00:26:10] Speaker 00:
Is that correct?

[00:26:12] Speaker 04:
Well, I would say that both things are important.

[00:26:15] Speaker 04:
However, the settlement

[00:26:17] Speaker 04:
is a huge price consideration.

[00:26:19] Speaker 04:
And if we consider just based on quantity alone, which certainly was important to the bankruptcy court, the amount of savings to the estate by settling the claim with the Framion dwarfs any other number being offered, either through overbid or cash or anything else.

[00:26:38] Speaker 04:
And the fact is my client didn't see a more attractive offer and therefore took the one that he felt was best.

[00:26:45] Speaker 04:
but that is part of the sale.

[00:26:48] Speaker 06:
Also, what you're suggesting is the trustee used his business judgment.

[00:26:53] Speaker 06:
The trustee was concerned about the potential liability of the estate if something adverse were to happen in the interim, that there was years of more litigation potentially before any resolution irrespective of if Mr. Cartwright got it or if he continued to fight with the other parties.

[00:27:13] Speaker 06:
it would go on for a long period of time.

[00:27:16] Speaker 06:
And the sale price was something that was created as a result of what money needed to transpire to be transacted in order to accomplish what the overall settlement was trying to achieve and transferring the property away so that the estate didn't have any further liability, right?

[00:27:33] Speaker 04:
That's exactly correct, Your Honor.

[00:27:34] Speaker 04:
And what I would also say is just

[00:27:37] Speaker 04:
This is a chapter seven bankruptcy of all the things that can be melting ice cubes of possible returns.

[00:27:44] Speaker 04:
This is one.

[00:27:45] Speaker 04:
And so when we're talking about some real risks to any marketability of the property, even from someone who is interested because they have a unique interest in settling the estate's case, the fact is

[00:28:02] Speaker 04:
that making that settlement go away or trying to scare away that possible settlement from my client's point of view is a detriment to the estate.

[00:28:14] Speaker 04:
So that is something that was very, frankly, we would probably bundle that into a third very important consideration that the bankruptcy court obviously enumerated in her reasons for granting the motion.

[00:28:32] Speaker 00:
I don't have any further questions.

[00:28:34] Speaker 00:
Anybody else?

[00:28:36] Speaker 00:
No.

[00:28:37] Speaker 04:
I see the rest of my time.

[00:28:38] Speaker 00:
All right.

[00:28:39] Speaker 00:
Thank you, Mr. Nelson and Mr. Subcobiac.

[00:28:43] Speaker 00:
Mr. Craig, you've got about a little bit less than two minutes.

[00:28:46] Speaker 03:
Thank you.

[00:28:47] Speaker 03:
I will be brief, Your Honors.

[00:28:50] Speaker 03:
The Fitzgerald case, a case we cited at page 24 of our opening

[00:28:54] Speaker 03:
It says it's not enough to simply satisfy administrative and unsecured claims in a case.

[00:28:59] Speaker 03:
That's not a sufficient analysis.

[00:29:02] Speaker 03:
And that seems to be what Mr. Nelson is supporting as well.

[00:29:05] Speaker 03:
All we had to do is take care of these claims.

[00:29:08] Speaker 03:
We believe that does not excuse failure to support the ultimate sale price here with evidence regarding what efforts were undertaken to market

[00:29:18] Speaker 03:
Why was this property allegedly worth zero, according to the trustee?

[00:29:22] Speaker 03:
We were never told.

[00:29:22] Speaker 03:
There was never any evidence to support that.

[00:29:25] Speaker 03:
And I disagree with Ms.

[00:29:26] Speaker 03:
Vanelsen.

[00:29:27] Speaker 03:
The issues were not all canvassed here.

[00:29:29] Speaker 03:
On the issue of continuing nuisance, a crucial issue, because the only way to get around the three-year statute of limitations on a 2005 landslide and a 2021 litigation filing, the only way to get around that three-year statute

[00:29:44] Speaker 03:
is to find a continuing nuisance or the possibility of that.

[00:29:48] Speaker 03:
In order to get there, you have to conclude that the repair costs were reasonable in relation to the value of the property.

[00:29:54] Speaker 03:
The bankruptcy judge never addressed the issue, never made a finding on the issue, and so what we're left with is the permanent nuisance concept in a three-year statute.

[00:30:03] Speaker 03:
Why is that important?

[00:30:04] Speaker 03:
Because the driving force behind this whole bankruptcy and why this case was difficult to resolve was

[00:30:11] Speaker 03:
crediting the claims of SMDLT2, which were $6 million.

[00:30:14] Speaker 03:
If those claims were given credit, the state was insolvent, no matter whose value you use.

[00:30:21] Speaker 03:
But if summary judgment were granted, as a matter of law, as we claim should have been done, that claim disappears, the case becomes solid, and it couldn't have been resolved.

[00:30:30] Speaker 03:
I believe my time is up.

[00:30:31] Speaker 03:
Happy to answer any questions.

[00:30:34] Speaker 00:
Any questions?

[00:30:35] Speaker 00:
No?

[00:30:36] Speaker 00:
All right.

[00:30:36] Speaker 00:
Thank you very much.

[00:30:37] Speaker 00:
This matter is submitted.