Liberty Bank, F.S.B. v. D.J. Christie, Inc.

Case Type:
Case Status:
16-3230 (10th Circuit, Mar 07,2017) Not Published
Reviewing the bankruptcy court's approval of the settlement independently, applying de novo review to legal determinations and reviewing factual findings for clear error, the 10th Circuit affirmed. The Court focused on the factors guiding the bankruptcy court's analysis under Bankruptcy Rule 9019(a). Given the duration and complexity of the litigation, the difficulty of collection, and the impact on third parties -- including holding that Christie's offset interest was prior to the garnishment lien of Liberty Bank -- the Court found the settlement to be fair and equitable.
Procedural context:
Liberty Bank appealed the bankruptcy court's decision approving the settlement to the district court, which affirmed. Liberty Bank then appealed to the 10th Circuit.
Alan Meyer owed Liberty Bank $948,084.11 , pursuant to two judgments. David J. Christie and D.J. Christie, Inc. (and another defendant) owed Meyer (and another plaintiff) $7.1 million pursuant to a federal judgment. The Christie parties acquired judgments against Meyer exceeding the amount the Christie parties owed Meyer and his co-plaintiff. Liberty Bank then served Christie with a garnishment summons, which Christie answered by asserting its right to offset the acquired judgments. Christie then filed Chapter 11 bankruptcy and initiated an adversary proceeding to effectuate the offset. A settlement was reached, in which the parties agreed to the offset and a $1.825 million payment from D.J. Christie, Inc. to the attorneys for Meyer and his co-plaintiff. Liberty Bank was not part of the settlement, but intervened asserting that the offset was improper and the settlement impaired its garnishment rights.
Phillips, McHugh, and Moritz, Circuit Judges

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