City Sanitation, LLC v. Allied Waste Services of Massachusetts, LLC, 2011 U.S. App. LEXIS 18115

American Cartage, Inc. filed Chapter 11, then converted to Chapter 7; trustee Burdick appointed to administer the estate.
FFC had a security interest in American Cartage’s assets, including equipment, with a broad security clause covering proceeds and related rights.
Final bankruptcy orders allowed some replacement liens and sale of collateral to satisfy FFC’s claim; the Equipment and Other Collateral were sold to Todesca Equipment and then to City Sanitation.
City filed a state court action against Allied and Zoll alleging tortious conduct; the bankruptcy case was later reopened when Allied brought the action to the trustee’s attention.
Bankruptcy court held the Allied claims were commercial tort claims belonging to the estate with exclusive trustee standing; settlement of those claims for $12,000 was approved; City challenged standing and the settlement but appellate review affirmed.
The court addressed Rule 8006 waiver, concluding City’s abandonment argument was waived, and concluded the settlement approval fell within the bankruptcy court’s discretion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are the Allied claims commercial tort claims belonging to the estate?	City asserts the claims are proceeds of collateral.	Burdick contends the claims are commercial tort claims belonging to the estate.	Yes; claims are commercial tort claims belonging to the estate.
Are the disputed claims proceeds of collateral or estate property?	City argues they are proceeds of collateral to FFC.	Burdick argues they are tort claims, not proceeds.	Claims are not proceeds; they remain estate property.
Did City waive Rule 8006 issues by not enumerating abandonment?	City argues abandonment was preserved despite non-enumeration.	Burdick argues waiver applies absent exceptional circumstances.	Waiver; abandonment argument was waived.
Was the bankruptcy court's settlement approval within its discretion?	City contends settlement undervalues and should be rejected.	Burdick argues settlement within range of reasonableness given Jeffrey factors.	Yes; approval was within the bankruptcy court’s discretion.

Shamus Holdings, LLC v. LBM Fin., LLC (In re Shamus Holdings, LLC), 642 F.3d 263 (1st Cir. 2011) (initial framework on creditor entitlements from underlying law)
Raleigh v. Ill. Dep’t of Rev., 530 U.S. 15 (U.S. 2000) (substantive law governs creditors’ rights in bankruptcy)
In re Carp, 340 F.3d 15 (1st Cir. 2003) (standard of review; direct consideration of bankruptcy rulings)
In re Watman, 301 F.3d 3 (1st Cir. 2002) (clear error/ de novo review standards)
In re Kane, 628 F.3d 631 (3d Cir. 2010) (trustee standing to prosecute estate assets)
Moses v. Howard Univ. Hosp., 606 F.3d 789 (D.C. Cir. 2010) (standing in bankruptcy contexts)
Koch Ref. v. Farmers Union Cent. Exch., Inc., 831 F.2d 1339 (7th Cir. 1987) (trustee standing; personal vs. estate claims)
Highland Capital Mgmt., L.P. v. Welsh, Carson, Anderson & Stowe, VI, L.P. (In re Bridge Info. Sys., Inc.), 344 B.R. 587 (E.D. Mo. 2006) (economic considerations in bankruptcy settlements)
In re Eagle Enters., Inc., 265 B.R. 671 (E.D. Pa. 2001) (trustee actions and estate administration concepts)
Whispering Pines Estates, Inc. v. Flash Island, Inc., 370 B.R. 452 (B.A.P. 1st Cir. 2007) (no requirement to consult creditors before settlements)