[00:00:00] Speaker 04: So with that, let's call the first case. [00:00:04] Speaker 04: Okay, can we have appearances, please? [00:00:28] Speaker 03: Good morning. [00:00:29] Speaker 03: Chris Young on behalf of the appellants. [00:00:30] Speaker 03: Okay. [00:00:31] Speaker 02: Morning, Your Honor. [00:00:32] Speaker 02: Sir Augustine on behalf of the elite. [00:00:33] Speaker 02: All right. [00:00:35] Speaker 04: Let me ask counsel for the appellant. [00:00:37] Speaker 04: Would you like to reserve some time for rebuttal? [00:00:39] Speaker 04: Please. [00:00:40] Speaker 04: How much would you like? [00:00:42] Speaker 03: Two and a half minutes. [00:00:43] Speaker 04: Two and a half minutes, okay. [00:00:45] Speaker 04: Not two minutes and 40 seconds, are you sure? [00:00:48] Speaker 04: Okay. [00:00:48] Speaker 04: I tell you what, we have a clock here. [00:00:50] Speaker 04: I don't know if you can see it. [00:00:53] Speaker 04: We will do our best to let you know where you're getting close to that, but it's basically on you to regulate that. [00:00:59] Speaker 04: And if you decide that you want to invade that time, that's also totally up to you, okay? [00:01:04] Speaker 04: But we'll do our best to give you a heads up when you're getting close to that. [00:01:07] Speaker 04: Okay, you may commence. [00:01:11] Speaker 03: I just have four basic points I want to highlight for the panel today. [00:01:16] Speaker 03: As you said, the briefing has been extensive, and you've reviewed it. [00:01:20] Speaker 03: So just the highlights. [00:01:23] Speaker 03: And first point, it was premature for the bankruptcy court to find the parties are still bound by the settlement agreement. [00:01:30] Speaker 03: And the issue, from the appellant's perspective, is whether the court could have made such a finding based solely on their motion for a Rule 60 relief. [00:01:38] Speaker 03: Appellants believe that the bankruptcy court erred in finding the agreement remains binding because of procedural and substantive errors. [00:01:46] Speaker 04: Well, can I pull that apart just a little bit? [00:01:49] Speaker 04: Please. [00:01:49] Speaker 04: The first, shall we say, ruling that I think is [00:01:57] Speaker 04: not the one you would have liked, was the notion that Rule 60 really doesn't apply here one way or the other, that it's just a poor application of Rule 60, or Rule 60 can't get you where you want to go. [00:02:09] Speaker 04: So if what you're suggesting is that was wrong, I'm happy to hear why you think that's true. [00:02:16] Speaker 04: But if you're suggesting that there was an argument in the bankruptcy court about the premature aspect of this, you're going to have to help me with that. [00:02:22] Speaker 03: Of course, we think that Rule 60 relief was appropriate here, the proper vehicle, because there was a settlement agreement that allowed Zhang's claim. [00:02:34] Speaker 03: And we believe there's a supervenient event that rendered that agreement no longer fair or equitable. [00:02:41] Speaker 03: And so to [00:02:44] Speaker 04: Well, again, if we pull that apart a little bit, the first aspect of this is a big question of whether Rule 60 is the appropriate way to think about a settlement agreement that was otherwise – I mean, from Judge Doar's perspective, everybody knew the alleged facts. [00:03:02] Speaker 04: And, you know, God bless your clients, they turned out to be right on some level, right? [00:03:06] Speaker 04: I mean, the Chinese judgment was eventually [00:03:08] Speaker 04: vacated, but everybody knew that when the settlement agreement was proposed. [00:03:12] Speaker 04: And I think his first – the first problem is, well, why doesn't that really make Rule 60 a very hard reach here? [00:03:20] Speaker 03: I agree with Your Honor. [00:03:22] Speaker 03: Generally, settlement agreements are not easily undone by Rule 60. [00:03:26] Speaker 03: We think this is a special case. [00:03:29] Speaker 03: If we file an objection to Zhang's claim and that settlement agreement is still blessed by the bankruptcy court, I think that's a very easy defense for Zhang. [00:03:40] Speaker 03: So this was one analytical step that we believe is necessary to object and disallow Zhang's claim. [00:03:48] Speaker 04: Well, would you would you be arguing then that notwithstanding the settlement agreement, the objection was not resolved? [00:03:56] Speaker 03: I believe that it is no longer fair or equitable to the opponent. [00:03:59] Speaker 04: But it was resolved at the time, right? [00:04:01] Speaker 04: Or not? [00:04:03] Speaker 03: There was an agreement at the time. [00:04:04] Speaker 03: Yes. [00:04:04] Speaker 03: OK, thanks. [00:04:09] Speaker 03: So again, the first point I'd like to make is, again, we think Rule 60 relief is warranted. [00:04:16] Speaker 03: But the court made an error in finding that the parties are still bound by the settlement agreement. [00:04:22] Speaker 03: Because that question was not presented. [00:04:25] Speaker 03: It was whether the authority to enter into the agreement should be maintained. [00:04:29] Speaker 03: And we believe it should no longer be authorized, the settlement. [00:04:36] Speaker 03: So from the appellant's perspective, [00:04:39] Speaker 03: The question was not presented to the court whether the settlement agreement is still binding. [00:04:48] Speaker 03: It may have been binding at the time. [00:04:50] Speaker 03: The court approved the opponents to enter into it, but now we say that it [00:04:56] Speaker 03: We haven't made that argument. [00:04:57] Speaker 03: So it's premature. [00:04:59] Speaker 00: I'm just not getting this distinction that you're trying to draw. [00:05:04] Speaker 00: It seems like you have to determine whether or not the settlement agreement is still binding. [00:05:09] Speaker 00: So I don't understand why you're saying it was premature for the bankruptcy court to do that. [00:05:14] Speaker 00: And if that's the case, why even bring this motion then? [00:05:17] Speaker 00: I just don't understand it. [00:05:22] Speaker 03: So we see it as a distinction between the settlement agreement remaining binding and the authority to enter into it. [00:05:30] Speaker 03: So the settlement agreement was binding at the time. [00:05:34] Speaker 03: The funds were authorized to enter into it. [00:05:37] Speaker 03: But now we're asking for the court to say, no, it is no longer in the best interest of the estate and creditors for this agreement to remain binding. [00:05:45] Speaker 03: We haven't presented any defenses [00:05:48] Speaker 03: about performances being due or other reasons why the agreement would not be binding in a contractual sense between the parties. [00:05:55] Speaker 03: So that's the distinction that I'm trying to make. [00:05:59] Speaker 04: Can I give you a quick reaction to that? [00:06:01] Speaker 04: Please. [00:06:02] Speaker 04: If the whole rubric of why this is questionable under Rule 60 is the notion of the sanctity of settlement agreements and finality, [00:06:11] Speaker 04: I mean, if finality is the point here, and you may tell me you don't think it is, but if it is, that suggests that the distinction that you're arguing for here really is not sustainable. [00:06:21] Speaker 04: And by the way, we'll come back to – I mean, I understand what you're saying about the ultimate benefit of the estate. [00:06:25] Speaker 04: If the claims were lower, there would be a benefit of the estate. [00:06:28] Speaker 04: you hash that out in connection with the settlement agreement, right? [00:06:31] Speaker 04: And there were a whole bunch of benefits that were obtained here, including a quick confirmation of a plan and getting rid of a whole bunch of other objections that the debtor didn't want to deal with. [00:06:40] Speaker 04: I don't blame them. [00:06:41] Speaker 04: I wouldn't have either. [00:06:42] Speaker 04: But there was, I mean, there's a big pot here, right? [00:06:45] Speaker 04: It's not just the judgment. [00:06:49] Speaker 03: As for finality, I agree. [00:06:51] Speaker 03: Some agreements are beneficial in that there's finality between parties that ends litigation. [00:06:56] Speaker 04: Right. [00:06:56] Speaker 03: But here, there are good reasons that outweigh finality in this instance. [00:07:02] Speaker 01: Is that the test? [00:07:03] Speaker 01: Again, as Judge Lafferty alluded to in the introduction, I mean, good reasons outweigh, is that really what we're looking at? [00:07:15] Speaker 01: There is an approved settlement agreement. [00:07:18] Speaker 01: That is the order under 60 B. You are now setting that aside and you've asserted three three basis to do so. [00:07:27] Speaker 01: So I'm not sure that we really is really relevant that that you believe that the benefits outweigh now. [00:07:36] Speaker 03: When courts, what I understand when courts look at rule 60, it's a balance between finality and the interests of justice. [00:07:47] Speaker 03: And we believe that this is the rare instance where interests of justice outweigh finality. [00:07:53] Speaker 03: And in fact, we don't believe finality here is really at issue because the confirmed plan [00:07:59] Speaker 03: provides the appellants with the opportunity to object to any claim, including Zhang's claim. [00:08:05] Speaker 03: And that's all that they're seeking to do. [00:08:07] Speaker 03: If courts or the panel here today say, no, you don't need Rule 60 relief to object to this claim, great. [00:08:15] Speaker 03: Then the appellants will go down that route without the Rule 60 relief. [00:08:18] Speaker 03: But this was one procedural step we thought necessary. [00:08:22] Speaker 04: Well, another comment, and I realize we're kind of meandering all over your argument, so I apologize to you for that, but another comment with respect to finality versus, you know, the public interest, I think those cases tell us that there has to be a particular public interest as opposed to a private interest, which is I wish I hadn't made this deal. [00:08:41] Speaker 04: So what's the public interest here as opposed to I wish I hadn't made this deal? [00:08:45] Speaker 03: Thank you, Your Honor. [00:08:47] Speaker 03: Great point. [00:08:48] Speaker 03: We believe the public interest is not allowing a party to commit fraud and get a windfall from that. [00:08:55] Speaker 03: And so the public interest, from my perspective, is not allowing the bankruptcy courts to be used as a way to voice a payment obligation. [00:09:05] Speaker 04: Well, can I just make sure I understand you? [00:09:07] Speaker 04: And what I think the bankruptcy court decided as well [00:09:13] Speaker 04: They weren't seeing any fraud with respect to the settlement agreement. [00:09:18] Speaker 04: If there is some, I didn't see it at the bankruptcy court level, and I know there was an allusion to it in the brief, but I'm not sure what that was, other than somebody maintaining that my judgment is valid and somebody else saying, well, no, it wasn't. [00:09:31] Speaker 04: I mean, everybody knew all that. [00:09:32] Speaker 04: So is there something independently fraudulent or problematic in connection with the settlement agreement that we can hang our hat on here? [00:09:39] Speaker 03: But you're right, Your Honor, and I would say that maintaining that there's a claim when there is none, and everyone knows that it's a false lawsuit, and the tribunal in China made that finding, I believe that is fraud, to maintain that you have a claim when you don't. [00:09:57] Speaker 04: Well, you don't when somebody says you don't. [00:10:01] Speaker 04: Right? [00:10:01] Speaker 04: I mean, it took another act of somebody saying, you know, we're going to vacate this judgment. [00:10:07] Speaker 04: But at the time, I mean, certainly, and to your client's credit, they said consistently, this is problematic. [00:10:13] Speaker 04: This judgment shouldn't stand. [00:10:14] Speaker 04: And they fought it. [00:10:15] Speaker 04: I give you all those points. [00:10:17] Speaker 04: But at some point, they did what litigants do. [00:10:19] Speaker 04: They decided that, well, in the interest of finality, and frankly, for the estate, and it was a noble thing to do for your clients. [00:10:26] Speaker 04: In the interest of the estate, we're all better off if we resolve this. [00:10:29] Speaker 04: And you did. [00:10:30] Speaker 04: So I'm looking for something that's independent of that whole process to show me some fraud that we can hang our head on for real 60B purposes. [00:10:39] Speaker 03: I understand. [00:10:40] Speaker 03: And I believe that it's really not knowing about the fraud is being powerless to do anything about it. [00:10:47] Speaker 03: And so here, [00:10:48] Speaker 03: The appellants knew of the fraud, but they couldn't do anything about it. [00:10:52] Speaker 03: And they were duty bound to maximize value for other creditors. [00:10:56] Speaker 01: Why couldn't they do anything about it? [00:10:57] Speaker 01: I mean, why couldn't they file the objection that you want to file now? [00:11:00] Speaker 03: That would have been dismissed immediately, expeditiously even. [00:11:05] Speaker 03: I don't believe the bankruptcy court would have entertained an objection before the reversal period. [00:11:11] Speaker 03: That's why, Your Honor. [00:11:13] Speaker 01: This may be, and I'm getting into your time as well, [00:11:17] Speaker 01: My understanding is that the Pellants never did contest the judgment in China directly. [00:11:26] Speaker 01: It involved the third party seeking to revoke it as a detriment to their collection of their debt through the proceedings over there. [00:11:37] Speaker 01: Is that correct? [00:11:39] Speaker 03: I don't believe that they were aware of their rights to appeal as a judgment was rendered in absentia. [00:11:45] Speaker 01: But the record seems to indicate that they instigated, if only aided, the third party action. [00:11:56] Speaker 01: So there seems to be some knowledge and some involvement. [00:12:01] Speaker 03: Over a course of months or years. [00:12:03] Speaker 03: Yes, I think that's right. [00:12:04] Speaker 03: But keep in mind that these folks were here in the United States since 2014, 2015. [00:12:10] Speaker 03: So I'm not, I can't really be sure what actions were taken, but I don't believe they sought an appeal at the time. [00:12:21] Speaker 01: No. [00:12:23] Speaker 03: Okay. [00:12:23] Speaker 03: Going quickly back to the point of fraud. [00:12:26] Speaker 03: I just want to reiterate that our position is that [00:12:31] Speaker 03: asymmetrical power, voice to this position on the appellants. [00:12:38] Speaker 03: And so they're unable to do anything with the knowledge of the fraud. [00:12:43] Speaker 03: They're powerless. [00:12:44] Speaker 03: So our position is that for rule 60B3 purposes, they may had knowledge, but they couldn't do anything with it. [00:12:52] Speaker 03: And that's really where the fraud and the party misconduct applies here. [00:12:57] Speaker 03: So with that, I would like to reserve time if I can. [00:13:00] Speaker 04: You've got a little more than three minutes. [00:13:03] Speaker 04: OK, very good. [00:13:04] Speaker 04: Thank you very much. [00:13:09] Speaker 04: OK, let's hear from Applebee's counsel. [00:13:13] Speaker 02: All right, Your Honors. [00:13:15] Speaker 02: Good morning, Your Honors, and may it please the court. [00:13:18] Speaker 02: I wanted to address this prematurity argument. [00:13:21] Speaker 02: It was never made before the bankruptcy court. [00:13:22] Speaker 02: It's not preserved. [00:13:24] Speaker 02: What are they trying to do here? [00:13:25] Speaker 02: They're trying to undo the settlement through Rule 60B. [00:13:27] Speaker 02: It was not premature for the court to hold in denying that Rule 60B motion to undo its approval of the settlement to suggest that the settlement is still valid. [00:13:36] Speaker 02: I wanted to address, Your Honor, specifically Judge Brands pointing to the estate, perhaps other creditors getting more if this is undone, the benefit to the estate. [00:13:43] Speaker 02: I want to stress that debtors profess concern for other, quote, stakeholders is just wolfs speaking a sheep's skin. [00:13:50] Speaker 02: What other creditors get is governed by the confirmed plan, which Jiang did not object to because of the settlement. [00:13:55] Speaker 02: I invite the court to look at the plan's treatment for Class IX creditors who are debtors' Chinese creditors from whom they borrowed millions of dollars before fleeing China and buying four mansions here in Seattle in 2015. [00:14:07] Speaker 02: The Class IX treatment says that debtors dispute each and every one of these claims vigorously and will not pay them. [00:14:12] Speaker 02: And by the way, they didn't schedule these claims until we required them to schedule them and notify these people as part of the settlement, Australian DACA 45, which is there amending the schedule to identify these creditors. [00:14:24] Speaker 02: And supplementary experts of the record, page 191, shows section seven of the settlement where we made them give a representation that they scheduled potential claims held by people in China against them. [00:14:36] Speaker 02: So to the extent our settlements overturned, debtors get millions. [00:14:39] Speaker 02: that it frees up. [00:14:40] Speaker 02: Debtors' concern is not for other creditors. [00:14:42] Speaker 02: Their concern is to keep as much of the money they defrauded from numerous creditors in China as possible, as much of it as possible. [00:14:48] Speaker 02: In fact, the lengths they've gone through to undo the settlement plan and plan only adds to their costs, adds the occurring interest on Zhang's claim, which helps no stakeholder whatsoever. [00:15:00] Speaker 02: Here, debtors invoke rule 60B3, 5, and 6 to seek to undo a rule in the 1919 order approving a settlement agreement. [00:15:08] Speaker 02: I'll address each of these rules in turn. [00:15:11] Speaker 02: The law on Rule 60B3, which permits vacature of orders for fraud, makes clear that the fraud must have been one, undiscoverable prior to the order, two, undertaken in the proceeding that led to the order itself, and three, that it prevented debtors from presenting their case. [00:15:27] Speaker 02: Here, it's admitted that none of these things happened. [00:15:29] Speaker 02: Rather, debtors only argued that their own subjective belief that they had an unwinnable case caused them not to present that case prior to settling by choice. [00:15:40] Speaker 02: Rule 63B3 is not available. [00:15:43] Speaker 02: Mr. Yang just said the bankruptcy court wouldn't have entertained an objection before the vacancy in China. [00:15:48] Speaker 02: Says who? [00:15:49] Speaker 02: It's their own belief. [00:15:51] Speaker 02: The bankruptcy court was sitting right before them. [00:15:52] Speaker 02: They could have filed an objection any time. [00:15:55] Speaker 02: They didn't do it. [00:15:56] Speaker 02: The law in Rule 60B-5 is equally clear that for changed circumstances to overturn an agreed decree such as the settlement approval here, the movement must 1. [00:16:05] Speaker 02: Convince a court that it agreed to the decree in good faith, 2. [00:16:09] Speaker 02: Made a reasonable effort to comply, and 3. [00:16:12] Speaker 02: Should be relieved of the decree as a matter of equity. [00:16:15] Speaker 02: The failure to meet any prom warrants denial. [00:16:18] Speaker 04: Let me ask you a question. [00:16:21] Speaker 04: The appellant suggests, going back to 60B3, the appellant suggests that the court's reliance on Pacific Antarctic Railway was wrongful because it was simply not an analogous case. [00:16:34] Speaker 04: Do you want to address that? [00:16:36] Speaker 04: I mean, that's the case that makes the point you're making here, that there needs to be basically clear and convincing evidence and undiscoverable fraud and so on. [00:16:44] Speaker 02: Your Honor, the case is not, I guess, factually overlooking the case. [00:16:49] Speaker 02: But the principle is simple. [00:16:51] Speaker 02: It's consistent. [00:16:53] Speaker 02: I mean, Pacific versus United is one of dozens and dozens of 60 people. [00:16:58] Speaker 02: The fraud needs to be undiscoverable. [00:17:01] Speaker 02: That's the principle it's being cited for. [00:17:02] Speaker 04: And you would say that the factual context isn't determining that principle, right? [00:17:06] Speaker 04: The principle would pertain in any number of factual contexts. [00:17:10] Speaker 02: Absolutely. [00:17:11] Speaker 02: And in this particular factual context, they knew everything that they could have asserted. [00:17:15] Speaker 02: They were instigating the third-party litigation in China precisely with a view towards overturning the judgment here and undoing our right to keep enforcing it. [00:17:24] Speaker 02: But they settled when the third party suit was initially dismissed. [00:17:28] Speaker 02: They understood that this last ditch effort was over at that point, or most likely over, even though the third party was appealing. [00:17:35] Speaker 02: So that's why they settled. [00:17:37] Speaker 02: So back to rule 60B5, any of the three prongs that I just set forth, any of them not being met warns denial of rule 65. [00:17:46] Speaker 02: The debtors argued that they entered, and I was just talking about the decree, right? [00:17:49] Speaker 02: They entered into the decree [00:17:51] Speaker 02: So the first element is that they have to have entered the decree in good faith. [00:17:58] Speaker 02: Well, what do we see here? [00:18:00] Speaker 02: The debtors actually argue in their briefing that they entered into the decree in bad faith while harboring a plan to undertake efforts in China to undo it. [00:18:09] Speaker 02: and to come back to undo the decree if those efforts turned out well for them. [00:18:14] Speaker 02: Well, needless to say, if those efforts failed as they initially, you know, say the third party's dismissal was not overturned, [00:18:24] Speaker 02: Well, they plan to enjoy the benefits of decree, which were many, so prong one is unmet. [00:18:29] Speaker 02: Nor is prong two, since debtors have not made a reasonable effort to comply with the decree, though they're fully capable. [00:18:34] Speaker 02: As for equity sufficient to warrant relief for changed circumstances, the Ninth Circuit and the Sarko may clear that, in addition to good faith and reasonable efforts to comply, the movement's own circumstances must have changed. [00:18:46] Speaker 02: such that it would be inequitable to require continued performance. [00:18:50] Speaker 02: But here debtors' own circumstances are completely unchanged from when they entered into the decree. [00:18:55] Speaker 02: Finally, when undertaking a rule 60B5 analysis, the court may consider whether the moving party has acted equitably. [00:19:03] Speaker 02: And that's Wright and Miller section 60.22. [00:19:04] Speaker 02: However, their alleged misconduct here is debtors admitting to their own fraud, supposedly undertaken in collusion with Zhang, to fake a judgment in China. [00:19:15] Speaker 02: There is a mission that they enter into the settlement in bad faith and their allegation, which my client absolutely denies, that they colluded with her to fake IOUs underlying the original Chinese judgment shows that they have not acted equitably foreclosing Rule 60B5 relief. [00:19:32] Speaker 02: Law in Rule 60B6 is clear that circumstances covered by Rules B3 and B5 are not contemplated by B6. [00:19:39] Speaker 02: This is already dispositive. [00:19:41] Speaker 02: Substantively, [00:19:42] Speaker 02: Rule 60B6 focuses on, quote, extraordinary circumstances. [00:19:47] Speaker 02: In Harvest versus Castro, the Ninth Circuit addressed what is not sufficiently extraordinary to warrant Rule 60B6 relief. [00:19:53] Speaker 02: As that case stressed, citing Lashaw versus Traynor wore them coat. [00:19:57] Speaker 02: The Ninth Circuit case from 2006. [00:20:00] Speaker 02: The 60B6 movement, quote, must demonstrate both injury and circumstances beyond his control that prevented him from proceeding with the action in a proper fashion. [00:20:11] Speaker 02: There, the court in Harvest v. Castro set a deadline for the state to retry a criminal defendant who had previously been convicted of first degree murder, or at least to modify the conviction to second degree murder, if they wanted to keep the defendant incarcerated. [00:20:26] Speaker 02: The state failed to do so purely as a result of an administrative oversight in a department that was not even responsible for prosecuting the defendant. [00:20:35] Speaker 02: The Ninth Circuit found that the state's interest in keeping this person imprisoned is not sufficiently extraordinary to warn Rule 60B6 relief from the deadline order and ordered this person's release. [00:20:45] Speaker 02: In essence, he released a convicted second degree murderer because the state missed a deadline to retry him for first degree murder, which is something within the state's control. [00:20:54] Speaker 02: I looked up second degree murder, and this is what the Cornell Legal Information Institute definition says. [00:20:58] Speaker 02: Both first and second degree murder are intentional homicide crimes. [00:21:01] Speaker 02: Second-degree murder is typically murder with malicious intent, but not premeditated. [00:21:06] Speaker 02: The defendant is intent to kill. [00:21:09] Speaker 02: The state's interest in obtaining a first-degree murder conviction, or at least to keep a convicted second-degree murder incarcerated, is not sufficient. [00:21:19] Speaker 02: failure to obey the deadline was due to an administrative oversight not within the specific control of the local prosecutor's office. [00:21:25] Speaker 02: Debtors using their own self-incriminating testimony of their own fraud to undermine an agreed decree, using information that means always within their control, free settlement, is not sufficiently extraordinary for Rule 60B6 relief. [00:21:39] Speaker 02: On reply, debtors have cited no law whatsoever to rebut any of these realities, [00:21:45] Speaker 02: Contrary to their hyperbole, there's no abuse of the legal system against unsophisticated immigrants, nor any shackled hostage situation. [00:21:54] Speaker 02: Debtors are multimillionaires who live in a house with a private lake in Seattle, always represented by capable counsel throughout the state court suit and the bankruptcy, including the settlement negotiations, the settlement approval, and the plan confirmation process. [00:22:08] Speaker 02: nor is there any mechanism for objecting to Jiang's claim quote at any time as they insisted about the brief. [00:22:13] Speaker 02: Instead, the plan contains a private statute of limitations and says not a word about the local rule's 60-day post-confirmation deadline to object, which they had already missed. [00:22:22] Speaker 02: That does make much of my statement during settlement negotiations that their proposal to make the settlement contingent on their efforts in China, showing that it was known, [00:22:30] Speaker 02: was redundant. [00:22:32] Speaker 02: But here's what I said. [00:22:33] Speaker 02: The changes are redundant because if the Chinese judgment is disturbed, you're going to come back to court anyway and argue everything you can. [00:22:38] Speaker 02: But there is no way we would concede affirmatively in a settlement agreement that my client might be subjected to criminal charges or that the Chinese judgment may be disturbed by anything. [00:22:48] Speaker 02: Setting aside that the motion and appeal right now is about Rule 60B and goes to the approval, not contract interpretation, setting aside that there's an integration agreement in the contract [00:22:59] Speaker 02: Setting aside that we struck the contingency from the contract, setting aside Washington law that stricken provisions are read not to be part of the contract, and setting aside Washington law that it is for the party who possesses a claim to explicitly reserve it or lose it in a settlement, which is presumed to cover all disputes between parties, setting aside all of this. [00:23:18] Speaker 02: Debtors said in their opening brief at page six that they read the statement to me, quote, Jang realized that upon reversal of the PRC judgment, appellants would seek to vacate the judgment. [00:23:29] Speaker 02: Taking this interpretation of face value as correct, the most it can mean is that we had no illusions that they would come back and try everything they can dream of despite the settlement, but that as I make clear, quote, there is no way, end quote, we would contractually allow for the possibility that a successful vacatur in China, which all parties anticipated was a possibility when settling, could be a possible ground for actually undoing the settlement substantively. [00:23:53] Speaker 02: That is why we repeatedly struck the proposed contingency from the contract and rejected a reservation of rights, which had the effect of settling everything. [00:24:01] Speaker 04: The thing that was maybe a little bit grating was if I wanted to remark that someone certainly could make any legal argument they wanted to make, like a Rule 60B motion, if the judgment were to be overturned in China, I'm not sure I would have used the word redundant. [00:24:20] Speaker 04: Because that suggests an equivalence. [00:24:22] Speaker 04: So tell me what you think you meant by that. [00:24:25] Speaker 02: Your Honor, it was in the midst of intense settlement negotiations. [00:24:30] Speaker 04: I don't know that I- So it simply wasn't a good choice of words. [00:24:32] Speaker 04: Would that be a good response? [00:24:34] Speaker 02: Maybe. [00:24:34] Speaker 02: You know, I've thought about this. [00:24:36] Speaker 02: And I try to rack my own mind about my own memory. [00:24:38] Speaker 02: And I'm not sure. [00:24:40] Speaker 02: I really don't specifically recall. [00:24:42] Speaker 02: And I'm an advocate. [00:24:43] Speaker 02: And so I just can't say anything that I don't specifically remember. [00:24:48] Speaker 02: But I don't think it was. [00:24:50] Speaker 02: I don't think I've meant anything by it. [00:24:53] Speaker 02: But to the extent that I expected debtors to welch because I'm cynical about their motives, I was under no duty to advise them how best to renege, nor does it change that they cannot do so under Rule 60B, which is the path they've chosen here, nor does it change that the use of that word has no impact on contract interpretation when we struck their proposed contingencies from the contract. [00:25:16] Speaker 02: Finally, none of this really matters. [00:25:18] Speaker 02: It's all moot. [00:25:19] Speaker 02: Because the plan itself remains unchallenged to date. [00:25:23] Speaker 02: Under the Federal Rule of Backstreet Procedure 90-24 and 11-44, they had 180 days to try to revoke the plan. [00:25:30] Speaker 04: Yeah, that's gone, right? [00:25:32] Speaker 02: Yeah, and they're passed. [00:25:35] Speaker 02: There are multiple statute of limitations. [00:25:37] Speaker 02: I won't even get into the 60-day deadline and the private statute of limitations in the contract itself. [00:25:41] Speaker 02: So even if the settlement goes away, Giant's claim is still allowed by an unappealable [00:25:47] Speaker 02: unchallengeable and unmodifiable plan. [00:25:51] Speaker 02: I welcome the court's questions. [00:25:54] Speaker 01: I'll ask one just for my own edification. [00:25:59] Speaker 01: Assume that there was no settlement and the court in China makes its decision. [00:26:09] Speaker 01: Is it [00:26:11] Speaker 01: Is it accurate, or does your client concede that there would be no claim in the bankruptcy court on behalf of the Appalachians? [00:26:21] Speaker 01: Would it have wiped up all debt? [00:26:26] Speaker 02: Your Honor, I guess I would have to play through the procedural steps. [00:26:28] Speaker 02: Yes, say they, I think we would have, I think here's one thing that was interesting about the Chinese court order, which is that my client insisted [00:26:36] Speaker 02: that the court and did submit the entire banking history between the two parties across all of their many bank accounts and insisted that the court conducting an accounting to prove that my client was actually owed the amount that was owed. [00:26:53] Speaker 02: Both the third party litigant and debtors vigorously resisted that. [00:26:56] Speaker 02: They said, no, no, no, no, no. [00:26:58] Speaker 02: Our testimony that there was a fraud in the underlying IOUs was sufficient. [00:27:03] Speaker 02: And the court said, specifically rule. [00:27:05] Speaker 02: Yeah, I'm not going to get into the debtor creditor relationship between these two parties. [00:27:10] Speaker 02: I'm just going to take the self accusation of fraud at face value and do this. [00:27:16] Speaker 02: So I think to the extent that the Chinese judgment is overturned, yes, it would obviously result in the overturning of the state court judgment recognizing it. [00:27:26] Speaker 02: But I think we would have, we would absolutely file a new suit here or something, because the statute of limitations is told on those bank statements and say, look, we were actually owed this money. [00:27:35] Speaker 02: This stuff wasn't fake. [00:27:36] Speaker 02: You know, they might have made up the IOUs post hoc. [00:27:39] Speaker 02: to account for some sum of money owed. [00:27:43] Speaker 02: But if you want to do an accounting, my client is owed this money. [00:27:47] Speaker 02: The Chinese court just didn't get into that, unfortunately. [00:27:49] Speaker 02: And that decision is on appeal on the specific basis. [00:27:53] Speaker 02: And we're saying to the appellate court in China, look, we insist on an accounting. [00:27:56] Speaker 02: We are owed this money. [00:27:57] Speaker 02: We can prove it. [00:27:59] Speaker 02: So I guess that's my sort of long-winded answer to you. [00:28:01] Speaker 02: OK, thank you. [00:28:05] Speaker 04: Thank you, Your Honors. [00:28:09] Speaker 04: Okay, you've got a little over three minutes. [00:28:12] Speaker 03: Thank you. [00:28:13] Speaker 03: We heard much there that the appellants disagree with, and we've set forth the appellants disagreement in the briefing, including the reply. [00:28:23] Speaker 03: But I want to stress that the plan itself provides the means by which Sean's claim may be disallowed. [00:28:29] Speaker 03: And so this focus on the plan is dispositive and renders us appeal. [00:28:35] Speaker 03: I disagree with that completely. [00:28:39] Speaker 03: The plan [00:28:40] Speaker 03: is the mechanism. [00:28:41] Speaker 03: It is out there. [00:28:42] Speaker 03: It's ready. [00:28:45] Speaker 03: This is what the appellants have relied on. [00:28:47] Speaker 03: By reserving the right to object to Zhang's claim, the plan permits the appellants to let litigation run its course in China, including whether there's an appeal of the reversal. [00:28:59] Speaker 03: So we think these matters should run their course. [00:29:03] Speaker 03: before we asked the bankruptcy court to rule on disallowance. [00:29:07] Speaker 03: That's something that the King County Superior Court agreed with. [00:29:09] Speaker 03: They said that the appellant's motion for Rule 60, relief of the judgment, was premature until matters were finally resolved in China. [00:29:18] Speaker 03: And so that's what the appellants mean by they say, when we say premature, the bankruptcy court's ruling on the asylum agreement is premature. [00:29:26] Speaker 03: They stand by that. [00:29:27] Speaker 03: The appellants simply ask for their opportunity to object to Zhang's claim, and that's an opportunity provided for in their confirmed plan. [00:29:36] Speaker 04: Thank you very much for your good arguments. [00:29:41] Speaker 04: The matter is submitted and we'll get you a decision as fast as we can. [00:29:44] Speaker 04: Thank you very much. [00:29:46] Speaker 04: Thank you, Your Honor.