Opposition Brief — Martin v. Robinson

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IN THE JOSEPH 5 ele

Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-

WILLIAM W. MARTIN, ROBERT E. MOSHER, and the

Legal Action Committee for Marlin Investments,

Petitioners,

Fs

GILBERT ROBINSON, Trustee in Bankruptcy,

Respondent.

WILLIAM EVERETT KANE AND BARBARA KELLY,

Interested Parties and Respondents.

OPPOSITION TO PETITION FOR A WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

HILL WYNNE TROOP & MEISINGER

ROBERT J. WYNNE*

MarK L. BLOCK

10920 Wilshire Boulevard

Ninth Floor

Los Angeles, CA 90024

(213) 824-5611

Counsel for Respondents

William Everett Kane

and Barbara Keily

* Counsei of Record

September 12, 1986

QUESTION PRESENTED

Whether the Court of Appeals and the District Court

correctly determined that the Bankruptcy Court made an

informed and independent judgment that the compromise

was fair and equitable and that the Bankruptcy Court did

not abuse its discretion in approving the compromise.

LIST OF PARTIES

The parties to the proceeding in the United States Court

of Appeals for the Ninth Circuit were:

: Gilbert Robinson, Trustee in Bankruptcy, Appellee

William Everett Kane, Interested Party

Barbara Kelly, Interested Party

K & K Properties, Inc., Interested Party

William W. Martin, Objector, Plaintiff, Appellant

Robert E. Mosher, Objector, Appeliant

William Everett Kane and Barbara Kelly file and serve

this Opposition to Petition for Writ of Certiorari as

Respondents pursuant to Supreme Court Rule 19.6.

Petitioners’ opening brief contains a list of numerous

individuals who are described as constituting the members

of the “so-called” Legal Action Committee for Marlin

Investments and Petitioners allege that it is on behalf of

those parties, in addition to certain others set forth above,

that objections have been made and the instant Petition for

Writ of Certiorari is being pursued. However, there has

never been a judicial finding (i) that the alleged Legal

Action Committee for Marlin Investments actually exists,

(ii) that the numerous individuals listed are actually mem-

bers of said committee, or (iii) that any of the numerous

individuals listed even concur in the position taken by

Petitioners. Respondents further believe that the Legal

Action Committee has no standing in this liquidation bank-

ruptcy case.

il

TABLE OF CONTENTS

Page

QUESTION PRESENTED ..........000scsseccscrssssssssesssnssesvenssesssivsonesstens i

EBT OP PE iiss isnncceivenierviianshipiansswntcnnansindtatiamieriraseamioets i

TABLE GF COAT IG U cvviessnssepssciccsvexsneassscusbsosssassanensentrsebenintase cons il

TABLE OR ALT TRE ee oisciecvessnssncenasssnshscnoesesassvsnnsnneetetecsscees ili

STATEMENT GR THEE CAGE. icssecisvssestonssisernsrssianccssncensavnronnesodns !

SUMMARY GF ARGUDMEND vicieccsccisnsivenssssnisosassrusresneeesarsnsesases 2

REASONS FOR DENYING THE WUE jcicccscssccssosisserscsssscssoses- 2

THE COURT OF APPEALS AND THE DISTRICT

COURT CORRECTLY DETERMINED THAT THE

BANKRUPTCY COURT MADE AN INFORMED AND

INDEPENDENT JUDGMENT THAT THE

COMPROMISE WAS FAIR AND EQUITABLE AND

THAT THE BANKRUPTCY COURT DID NOT ABUSE

ITS DISCRETION IN APPROVING THE

COR ovens vo vcsepvessenscisccesenintsstbbsspraistenuiisniauskunatonatenebss Z

A. The Court Of Appeals And The District Court Correctly

Determined That The Bankruptcy Court Made An

Informed And Independent Judgment That The

Compromise Was Fair And Equitable Under All Relevant

CEES oases soness onctnanseeaninernerinnentaioeanenel manana 2

B. There Is No “Most Important Factor” Test For

Determining Whether A Bankruptcy Compromise Should

Be Approved ....ccessessonsscesssessensoxsarssnesahernnasdaepencsuseemvenrtenerennesen 8

C. The Court Of Appeals And The District Court Correctly

Determined That The Bankruptcy Court Did Not Abuse

Its Discretion In Approving The Compromise ..............:006+ 10

COIICL URIIIOIN ns ccnsesscessesssoserseussrnesosesssonncdhalibdnnaadanetieeseaeeinenetanannes 14

iii

TABLE OF AUTHORITIES

Cases Page

In Re A&C Properties, 784 F.2d 1377 (9th Cir. 1986) .......... 8

In Re Albert-Harris, Inc., 313 F.2d 447 (6th Cir. 1963)........ 11

In Re Blair, 538 F.2d 849 (9th Cir. 1976) .....ccccecceeeeeeeeeeees 6,7

In Re California Associated Products Co., 183 F.2d 946

BE MM. BOWED vcevescssersecsvcssessesseosccesosecsonscososesesssoonsesesocescosenseces 3

In Re Equity Funding Corp. of America, 519 F.2d 1227,

I iniieineinnnsiininiccsndcreweniaseenenninesbunseennistevsvessnsteosawnes 3,14

In Re Flight Trans. Corp. Securities Litigation, 730 F.2d

EE, COED ccrsessncestissvsecsnesesneevageesevvevenssverseesassxensssess 7,10

In Re General Tire & Rubber Securities Litigation, 726

EE EE RE, CIGD sreccenesnepesessveovessevavessuravconssabvossensconss 9

In Re Imperial Irrigation Dist., 38 F.Supp. 770 (S.D. Cal.

1941), aff'd, 136 F.2d 539 (9th Cir. 1943), cert. denied,

EE 12

In Re W.T. Grant Co., 699 F.2d 599 (2d Cir. 1983) .......00000.. 4

In the Matter of Aweco, Inc., 725 F.2d 293 (Sth Cir. 1984).. 10

In the Matter of Orrin A. Ericson, 6 BRW 1002 (D.Minn.

ie i acdictdssnndnceustocenniesnonstandeseaiasctthotssoueses 7

In the Matter of Walsh Const., Inc., 669 F.2d 1325 (9th

etek ares alalatidhcnesedwiebmidsnenncntsssssennpounesvsnoevssecons 9,10

Magna Weld Sales Co. v. Magna Alloys & Research Pty,

I ee ND OEM GAT, BD IG) cccvsnseccsccccsoverccenssevescsveecoves 12

Mandujano v. Basic Vegetable Products, Inc., 541 F.2d 832

es cscircves tvanesbanndesstisaoaiusevvvssasesionnsssuossie 11

Manning v. Jones, 349 F.2d 992 (8th Cir. 1965) ........cccc eee 12

Matter of Jackson Brewing Co., 624 F.2d 605 (Sth Cir.

caves hedbeniatidistiestaevunkinicessasendesnuxeasnrsstiserenves 4,5,7,13,14

Matter of Ocobock, 608 F.2d 1358 (10th Cir. 1979)......00.000.. 10

Parker v. Anderson, 667 F.2d 1204 (Sth Cir. 1982)........00000... 9

Protective Committee for Independent Stockholders of

TMT Trailer Ferry, Inc. v. Anderson, 390

pe Miiinciciesaensvesesvenevescésnvecthassvenseess 4,5,6,7,9,10,14

Rossiter v. Vogel, 148 F.2d 291 (2d Cir. 1945) wu... ee. H

Schilling v. Schwitzer-Cummins Co., 142 F.2d 82 (D.C. Cir.

eee riaidansas uns sdsneattnsesexeessateesexsenvuvivenesseveceuesnave 12

Transport Equipment Co. v. Guaranty State Bank, 518 F.2d

I cai ssesdesonsicvsnnasivseniasosssacsoanveanceneverssiotovsese 12

iv

Page

Triangle Conduit & Cable Co. v. FTC, 168 F.2d 175 (7th

Se, BR, A, FEO Be. FO CITED wer siccnncsarcreccssessersnecesnss 12

Uniroyal, et al. v. Mumford, 454 F.2d 1233 (7th Cir. 1972). 12

Statue

ae Oe RII sn tvisccsiisscnssvixsonevensvenseqsovenesvenvéevacbseiunnsaevsnies 3,6,9

Rules

Federal Rules of Civil Procedure, Rule 23(€) ............c:ccceecseeee 11

Federal Rules of Civil Procedure, Rule 52(a)...........ccccceseeeee 1]

NEE SII ID sc ccaniesenpttosossntiensinbansinervesusersseoveevesons i

Other

5A-Moore’s Federal Practice (2d ed.) 52.06[1].............. eee 12

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-

WILLIAM W. MARTIN, ROBERT E. MOSHER, and the

Legal Action Committee for Marlin Investments,

Petitioners,

GILBERT ROBINSON, Trustee in Bankruptcy,

Respondent.

WILLIAM EVERETT KANE AND BARBARA KELLY,

Interested Parties and Respondents.

OPPOSITION TO PETITION FOR A WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

STATEMENT OF THE CASE

Petitioners’ statement of the case in their opening brief

sets forth many factual allegations unsupported by the

record, and outright distortions and misstatements of al-

leged facts. These not only distract from but are irrelevant

to the question properly before this Court, which is to

determine whether a writ of certiorari should be granted.

Respondents merely wish to state, for the record, that they

do not concur with Petitioners’ version of the facts.

2

SUMMARY OF ARGUMENT

The Bankruptcy Court made an informed and indepen-

dent judgment, after several hearings, that the compromise

at issue was fair and equitable. Both the District Court and

the Court of Appeals found that this was the case, based

upon the Bankruptcy Court’s Findings of Fact and Conclu-

sions of Law and upon the extensive record, consisting of

well over four thousand pages, compiled in this action.

Thus, there is no important question of federal law or

deviance from established authority for which to grant this

Petition for Writ of Certiorari.

There is also no “most important factor” test in any

circuit for determining whether a bankruptcy compromise

should be approved. Petitioners’ attempt to create the ap-

pearance of a division among the circuits on this ground is

a mere subterfuge at getting a second crack, after losing

the first time, at a hearing on the merits of the compromise.

REASONS FOR DENYING THE WRIT

THE COURT OF APPEALS AND THE DISTRICT

COURT CORRECTLY DETERMINED THAT THE

BANKRUPTCY COURT MADE AN INFORMED

AND INDEPENDENT JUDGMENT THAT THE

COMPROMISE WAS FAIR AND EQUITABLE AND

THAT THE BANKRUPTCY COURT DID NOT

ABUSE ITS DISCRETION IN APPROVING THE

COMPROMISE

A. The Court Of Appeals And The District Court Cor-

rectly Determined That The Bankruptcy Court Made

An Informed And Independent Judgment That The

Compromise Was Fair And Equitable Under All Rele-

vant Circumstances

Petitioners seek from this Court a Writ of Certiorari in

the hopes of reversing the decision of the Ninth Circuit

Court of Appeals which affirmed the United States District

3

Court’s affirmance of the bankruptcy judge’s decision to

approve the 1982 Settlement Agreement. The Bankruptcy

Act, Section 27, 11 U.S.C. § 50, however, grants broad

authority to the trustee to compromise any claims arising

in the administration of the bankruptcy estate under such

terms as he deems reasonable. Jn Re California Associated

Products Co., 183 F.2d 946 (9th Cir. 1950). The only

requirements for approval of the compromise are that the

trustee demonstrate that the controversy is of the type that

should be resolved by compromise, and that the proposed

compromise is reasonable under the circumstances. In Re

Equity Funding Corp. of America, 519 F.2d 1274 (9th Cir.

1975). There has been no suggestion that the disputes

covered by the 1982 Settlement Agreement ought not to be

settled. Petitioners merely attack the District Court’s and

the Court of Appeals’ affirmance of the Bankruptcy

Court’s decision that this particular settlement was a rea-

sonable one.

The bankruptcy judge, in approving a compromise, need

not determine that all claims compromised were neces-

sarily valid or that the litigation could not have been

resolved to the benefit of the estate. As the Court in Jn Re

California Associated Products Co., supra, at 949-950

stated:

“As to what the ultimate outcome of the litigation would

have been, we are not now [on appeal] directly con-

cerned. The primary purpose of a compromise settlement

is to avoid the necessity of determining sharply contested

and dubious issues. It is sufficient if we can say that the

outcome would have been doubtful. If the claim of the

appellant had substantial foundation and was not clearly

invalid as a matter of law then there was no abuse of

discretion on the part of the referee in approving the

compromise.”

4

The bankruptcy judge is merely required to determine

that the compromise is reasonable:

“In undertaking an examination of the settlement, we

emphasize that this responsibility of the bankruptcy

judge, and ours upon review, is not to decide the

numerous questions of law and fact raised by appellants

but rather to canvass the issues and see whether the

settlement ‘fall[s] below the lowest point in the range of

reasonableness’, Newman v. Stein, 464 F.2d 689, 693

(2d Cir.), cert. denied sub nom. Benson v. Newman, 409

U.S. 1039, 93 S.Ct. 521, 34 L.Ed.2d 488 (1972).”

In Re W. T. Grant Co., 699 F.2d 599, 608 (2d Cir. 1983).

The factors to be considered in deciding whether to

approve a compromise in bankruptcy proceedings have

been summarized as follows:

(1) The probability of success in the litigation with due

consideration for the uncertainty in fact and law,

(2) The complexity and likely duration of the litigation

and any attendant expense, inconvenience, and delay,

and

(3) All other factors bearing on the wisdom of the

compromise.”

Matter of Jackson Brewing Co., 624 F.2d 605, 607 (Sth

Cir. 1980) (“Jackson IT’) (Citing Protective Committee

for Independent Stockholders of TMT Trailer Ferry, Inc.

v. Anderson, 390 U.S. 414 (1968) (“TMT Trailer’’).)

Petitioners’ principal assertion is that certain stringent

standards must be met by trial and appellant courts, both

in the approval and in the review of bankruptcy settle-

ments, to verify that an informed and independent judg-

ment is made by the court in approving bankruptcy settle-

ments. These standards would include a more elaborate

hearing on the approval of a settlement agreement, consti-

tuting a mini-trial, thereby enabling petitioners to inquire

5

into various matters which the Bankruptcy Court found to

be inappropriate for the hearing which it held. Petitioners

primarily base their assertion upon TMT Trailer and Jack-

son II. However, both of these cases involve a Chapter X

reorganization of a public corporation, and do not require a

mini-trial as petitioners would impose on the courts. Fur-

thermore, the opinion below by the Ninth Circuit recog-

nized, to the extent they are applicable, the import of these

decisions to a Chapter VII iiquidation.

This Court’s decision in 7.4T Trailer involved a corpo-

rate reorganization under Chapter X of the Bankruptcy

Act of 1898, in which the District Court approved an

amended plan of reorganization which compromised cer-

tain claims and excluded the original shareholders from

participating in the reorganized company. The Supreme

Court held that it was error to affirm the District Court’s

approval of compromises of claims against the debtor, and

that it was error to affirm the District Court’s judgment

that the debtor was insolvent, when that judgment was

rendered without considering the future estimated earnings

of the reorganized company. [n its ruling that it was error

to affirm the District Court’s approval of compromises

against the debtor, this Court noted that the record did not

support the approval:

“If, indeed, the record contained adequate facts to sup-

port the decision of the trial court to approve the pro-

posed compromises, a reviewing court would be properly

reluctant to attack that action solely because the court

failed adequately to set forth its reasons or the evidence

on which they were based. The deficiency in this case,

however, is not merely a formal one. The evidence re-

ferred to by respondent is analyzed at greater length in

the margin’. Here it is enough to say that to the extent

that the record contained solid facts of the sort necessary

for appraising the merits of the claims against M-S,

virtually all of them point to the probable existence of

6

valid and valuable causes of action. Balancing these facts

are nothing but bold assertions to the contrary and

general conclusions for which foundations no where ap-

pear.” 390 U.S. at 437-439 (footnote omitted).

Thus, in TMT Trailer, the trial judge used only con-

clusory language in determining that the settlement in the

Chapter X proceeding was fair and equitable, and, addi-

tionally, the record was devoid of facts to support the trial

judge’s conclusions. The degree of scrutiny and the trial

court’s documentation of it, however, will and should vary

according to the nature of the proceedings. In a reorganiza-

tion proceeding, the settlement agreement must be careful-

ly scrutinized to ensure that the reorganized corporation

has sufficient assets to become viable once it comes out of

bankruptcy. In contrast, less scrutiny is needed when a

corporation is being terminated in a liquidation proceeding,

since all of its assets are being distributed to the various

creditors.

This distinction was recognized by the Ninth Circuit in

In Re Blair, 538 F.2d 849 (9th Cir. 1976). In deciding Jn

Re Blair, the Ninth Circuit expressly considered the ques-

tion of whether the dictates of TM7 Trailer, a Chapter X

reorganization proceeding, applied to a compromise ap-

proved in a liquidation proceeding pursuant to Section 27

of the Bankruptcy Act (11 U.S.C. § 50). The Court

stressed:

“Appellant asserts that even in a liquidation bankruptcy

compromise proceeding, there must be a mini-trial on

the merits of claims sought to be compromised. We

reject the notion. The decision as to whether there should

be a mini-trial in a liquidation bankruptcy as to the

merits of the compromised claims and defenses is best

left to the sound discretion of the bankruptcy judge upon

an application and showing of necessity by the interested

parties or by creditors of the bankrupt.

7

This is not the same as a Chapter X proceeding and

there are sound reasons for drawing the distinction. A

corporate reorganization is a continuing business affair

requiring close supervision and affecting many interested

parties. The success or failure of a reorganization may

hinge upon the very compromise at issue.’ A liquidation

bankruptcy is a terminal affair. The bankrupt’s financial

affairs are beyond repair. Liquidation is to be accom-

plished as rapidly as possible consistent with obtaining

the best possible realization upon the available assets

and without undue waste by needless or fruitless

litigation.”

* * *

“* In Protective Committee For Independent Stockholders, etc. v. Anderson, supra,

390 at 423, 88 S.Ct. at 1163, the lower court judgment ‘was rendered without

considering the future estimated earnings of the reorganized company.” Such a

vital issue is not involved in a liquidation bankruptcy compromise”.

538 F.2d at 851-852. See also In Re Flight Trans. Corp.

Securities Litigation, 730 F.2d 1128, 1135 (8th Cir. 1984)

(citing In Re Blair); In the Matter of Orrin A. Ericson, 6

BRW 1002, 1010 (D. Minn. 1980)(citing In Re Blair).

The case of Jackson II, supra, which is cited by Petition-

ers, is also a Chapter X corporate reorganization compro-

mise proceeding, and consequently, is also inapposite to the

instant appeal in connection with the scope of the hearing

that is required.

However, even if the standards imposed by TMT Trailer

and Jackson II are applicable to the present case, the

Bankruptcy Court met these standards by analyzing the

potential for prosecution of the claims released by the

settlement agreement and found this course of action to be:

“complex, uncertain of result and potentially expensive

. in terms of attorneys fees, court costs and delay

required, which delay could reasonably be expected to

result in damage to the estate or detriment to creditors.”

(Petitioners’ Appendix G, p. 69.)

8

Further, the record compiled after five days of extensive

hearings held in connection with approval of the settlement

agreement is more than sufficient to establish both the

complexity and doubtful outcome of litigating the disputes

which were compromised through the settlement agree-

ment, and that the settlement agreement was reasonable

given the particular circumstances of the case and other

required factors. As the opinion below of the Ninth Circuit

noted:

“It is clear from the record before us, which is well over

four thousand pages with reporter’s transcripts amounting

to one thousand pages, that the bankruptcy judge was in-

formed and had apprised himself of all facts necessary to

make an intelligent and independent judgment that the

compromise was fair and equitable. The litigation was filed

in the bankruptcy court in 1976, and the judge who ap-

proved the compromise had handled the maiter since 1980.

Thus, in addition to the settlement agreement, the bank-

ruptcy judge had heard testimony on the value of the cor-

poration’s assets, the terms of the ESOT (which appellants

challenge), and was well aware of the claims being asserted

by appellants in their Adversary Proceeding D, which was

before the court. There is clear support in the record for

our affirming the findings of fact with respect to the ap-

proval of the compromise.” In Re A & C Properties, 784

F.2d 1377, 1383 (9th Cir. 1986).

B. There Is No “Most Important Factor” Test For

Determining Whether A Bankruptcy Compromise

Should Be Approved

Petitioners erroneously assert that the second, fourth,

fifth, seventh and eighth circuits have adopted a “most

important factor” test for determining whether a bankrupt-

cy compromise should be approved. This “most important

factor” is asserted to be the probability of success on the

merits. (Openiig Brief, p. 24.)

9

However, neither the various circuit decisions cited by

Petitioners nor this Court’s decision in TMT Trailer sup-

ports this rather bizarre “most important factor” test for

bankruptcy proceedings. Specifically, Petitioners cite Jn Re

General Tire & Rubber Securities Litigation, 726 F.2d

1075 (6th Cir. 1984). However, the General Tire case

involved court approval of a settlement of several derivative

action suits, in which the trial court exercised its own

business judgment in approving the settlements. Similarly,

the second case cited by Petitioners, Parker v. Anderson,

667 F.2d 1204 (Sth Cir. 1982), involves approval of a

settlement of a class action employment discrimination

suit. Further, all of the cases of the various circuits referred

to in Parker, which Petitioners conveniently leave out of

their quote (Opening Brief, p. 24), are class action cases

involving employment discrimination and anti-trust claims.

None of the cases Petitioners cite in support of their “most

important factor” test involve bankruptcy proceedings, and

those bankruptcy decisions which are otherwise cited by

Petitioners do not even mention such a test.

While it may be true that in derivative and class actions

the most important factor in determining whether or not to

approve a settlement is the likelihood of success on the

merits, these actions differ significantly in character from

bankruptcy settlements. In a class action suit, the only

concern is with the well being of the class members. How-

ever, in a bankruptcy proceeding, the trial court or bank-

ruptcy court is primarily concerned with the health and

welfare of the estate. 11 U.S.C. § 50 (1976); see, In the

Matter of Walsh Const., Inc., 669 F.2d 1325, 1328 (9th

Cir. 1982).

Furthermore, the position advocated by Petitioners, that

one factor be considered paramount over all others, runs

contrary to this Court’s decision in TMT Trailer. This

Court in TMT Trailer stressed:

10

“Further, the judge should form an educated estimate of

the complexity, expense, and likely duration of such

litigation, the possible difficulties of collecting on any

judgment which might be obtained, and ali other factors

relevant to a full and fair assessment of the wisdom of

the proposed compromise.” 390 U.S. at 424.

The TMT Trailer test, therefore, is essentially a balancing

test in which “the district court must consider all factors

bearing on the fairness of the settlement...” Jn Re Flight

Transp. Corp. Securities Litigation, supra, at 1135. To

impose a “most important factor” test would unduly bur-

den and complicate the court’s determination of whether to

approve a bankruptcy settlement. In fact, none of the

bankruptcy cases cited by Petitioners require such an

analysis.

C. The Court Of Appeals And The District Court Cor-

rectly Determined That The Bankruptcy Court Did

Not Abuse Its Discretion In Approving The

Compromise

The bankruptcy courts enjoy wide latitude to approve

those settlement agreements they deem to be proper, and

their decision will not be overturned unless there is an

abuse of discretion. The closeness of the trial court judge to

the proceedings at hand provides one of the major founda-

tions for this rule. As the court in Jn The Matter of Walsh

Const., Inc., 669 F.2d 1325, 1328 (9th Cir. 1982) noted:

“The reasonableness of a compromise is determined by

the particular circumstances of each case. [Citation

omitted]. Because the bankruptcy judge is uniquely situ-

ated to consider the equities and reasonabieness of a

particular compromise, approval or denial of a compro-

mise will not be disturbed on appeal absent a clear abuse

of discretion. [Citations omitted.}”’

Accord, In the Matter of Aweco, Inc., 725 F.2d 293, 297

(Sth Cir. 1984); Matter of Ocobock, 608 F.2d 1358, 1360

1]

(10th Cir. 1979); In Re Albert-Harris, Inc., 313 F.2d 447,

449 (6th Cir. 1963).

Petitioners contend that because each and every one of

their multitudinous, redundant or irrelevant objections did

not merit specific attention in the Court’s written findings,

some wrong was done to them. As previously discussed, the

Bankruptcy Court was not required to expand the hearing

on the settlement agreement to that of a mini-trial.

Petitioners, in their opening brief, rely heavily upon the

case of Mandujano v. Basic Vegetable Products, Inc., 541

F.2d 832 (9th Cir. 1976) to support their assertion that the

Bankruptcy Court failed to properly dispose of Petitioners’

objections. That case, however, involves a settlement of a

class action suit filed pursuant to Title VII of the Civil

Rights Act of 1964, 42 U.S.C. 2000(e) et seq., and 42

U.S.C. 1981, in which the Court indicates that the more

stringent requirements of that case are not applicable in

the instant case:

“Observance of these procedures will impose a burden on

trial courts required by Rule 23(e) to approve dismissals

or compromises of class actions intended to vindicate

Title VII rights. This added burden, however, is neces-

sary to assure that valid objections are voiced, to inform

the trial court, and to create a reviewable record. [cita-

tion omitted]. The interests Title VII is designed to

secure are sufficiently important to warrant procedures

which minimize the risk of those interests being preju-

dice by the normal pressures to settle complex litigation

affecting a substantial part of the work force of an

employer.” 541 F.2d at 836.

Petitioners would therefore have Rule 23 of the Federal

Rules of Civil Procedure and the heightened burden re-

quired in a Title VII action apply to the instant case, even

though this is not a class action. However, Rule 52(a) of

the Federal Rules of Civil Procedure governs here, and

12

“does not require the court to make elaborate findings ...

upon all such facts as will present every possible view of the

case.” In Re Imperial Irrigation Dist., 38 F.Supp. 770, 772

(S.D. Cal. 1941), aff'd, 136 F.2d 539 (9th Cir. 1943), cert.

denied, 321 U.S. 787 (1944). A finding of such essential

facts as lay a basis for the decision is sufficient. Jd. Further-

more, findings need not assert the negative of rejected

propositions. Schilling v. Schwitzer-Cummins Co., 142

F.2d 82 (D.C. Cir. 1944); 5 A Moore’s Federal Practice

(2d ed.) 52.06[1}.

Moreover, “findings [of the trial court] are to be con-

strued liberally in support of a judgment or order...

Whenever, from facts found, other facts may be inferred

which will support the judgment, such inferences will be

deemed to have been drawn ...” /d., citing Triangle Con-

duit & Cable Co. v. FTC, 168 F.2d 175, 179 (7th Cir.

1948), affd 336 U.S. 956 (1949). See Transport Equip-

ment Co. v. Guaranty State Bank, 518 F.2d 377 (10th Cir.

1975) (where different inferences may be drawn, the Court

of Appeals will not substitute its judgment for that of the

trial court); Uniroyal, et al. v. Mumford, 454 F.2d 1233,

1234 (7th Cir. 1972) (Court of Appeals must look to

evidence most favorable to trial court’s findings and to such

reasonable inferences as may be drawn therefrom). In the

case of Manning v. Jones, 349 F.2d 992, 996 (8th Cir.

1965), the Court stated the rule as follows:

“[A] district court’s findings of fact must be liberally

construed and found to be in consonance with the judg-

ment if the judgment has support in the record evi-

dence... This is so even if the findings are not as specific

or detailed as might be desired”’.

Even the failure of a trial court to comply with the

requirements of FRCP 52(a) does not require reversai “‘if a

full understanding of the questions presented may be had

without the aid of separate findings.” See Magna Weld

13

Sales Co. v. Magna Alloys & Research Pty., Ltd., 545

F.2d 668 (9th Cir. 1976). Findings are not a jurisdictional

requirement of appeal but only aid appellate courts in

reviewing the decision below and defects therein may be

waived where the error is not substantial in the particular

case. Rossiter v. Vogel, 148 F.2d 291, 293 (2d Cir. 1945).

Thus, the Bankruptcy Court was not obligated to make

elaborate responses to each and every one of Petitioner’s

objections. In Jackson II, supra, the Court noted that

specific and detailed responses did not need to be made

directly or expressly on every point of contention:

“The evidence on this issue and others before the District

Court was thorough and comprehensive. Clearly the

Court was familiar with the entire record, touched all

material basis of the objections of the creditors, and held

directly, expressly or by necessary implication on every

substantial point of contention. The District Court

properly satisfied the requirements of TMT Trailers...

The Court’s approval of the arrangement constitutes not

an abusive discretion, but an uncompromising exami-

nation and approval of this carefully constructed

compromise.

As did the district judge, we hope this brings an end to

this never ending controversy.” /d. at 612.

It is difficult to imagine a more appropriate summation of

the instant case.

The Bankruptcy Court’s disposition of Petitioners’ objec-

tions was not carried out in a fashion that was clearly

erroneous or which constituted an abuse of discretion. The

Findings of Fact and Conclusions of Law adopted by the

Bankruptcy Court specifically held that all the elements

necessary for approval of a compromise existed. As previ-

ously stated, these elements include existence of substantial

disputes of the type amenable to compromise and the

14

reasonableness of a proposed compromise given the partic-

ular circumstances of the case. Jn Re Equity Funding

Corp. of America, supra, at 1227.

The record supports the Bankruptcy Court’s Findings of

Fact and Corclusions of Law, which are sufficiently com-

prehensive. Whether or not more elaborate Findings of

Fact and Conclusions of Law are required in Chapter X

cases pursuant to the cases of TMT Trailer and Jackson

II, as has previously been discussed, the law does not

require that a mini-trial be held in connection with the

compromise in a bankruptcy liquidation case. It is only

necessary that the Findings of Fact and Conclusions of

Law reflect the matters actually addressed by the bank-

ruptcy court at the hearing, and are based on substantial

evidence. Where, as here, the Findings of Fact and Conclu-

sions of Law are based upon substantial evidence, there is

no abuse of discretion and the Findings of Fact and Con-

clusions of Law are not clearly erroneous.

CONCLUSION

The Bankruptcy Court entered its order approving the

compromise after a full evidentiary hearing, properly

noticed to all parties. Indeed, the Bankruptcy Court

rendered its decision in a thorough and detailed manner,

after an additional hearing on challenges to the proposed

findings and conclusions. The Bankruptcy Court thus

evidenced a clear understanding of the standards governing

approval of bankruptcy compromises as well as a full

cognizance of the facts of the case. The compromise and

dismissal orders were drawn in such a way as to meticu-

lously safeguard the rights of all parties, including Petition-

ers. Not only has no error of law been demonstrated but

there is no important question of federal law or deviance

from established authority for which to grant this Petition.

Furthermore, there is no difference among the circuits as

to the need for a bankruptcy court to make an informed

iD

and independent judgment that a compromise is fair and

equitable and to issue appropriate findings thereon. There

is therefore no need or reason for this Court to grant the

instant Petition for a Writ of Certiorari.

Dated: September 12, 1986.

HILL WYNNE TROOP & MEISINGER

ROBERT J. WYNNE*

MarK L. BLOCK

/s/ ROBERT J. WYNNE

ROBERT J. WYNNE

Counsel for Respondents

William Everett Kane

and Barbara Kelly

* Counsel of Record