Don Smith v. Sonya Slott
23-12522
11th Cir.Jun 24, 2025Background
- No Rust Rebar, Inc. contracted to buy a property for manufacturing, paid a non-refundable deposit, but couldn't close on the purchase.
- No Rust assigned its purchase rights to Green Tech Development, LLC, who purchased the property, but No Rust remained in possession.
- Litigation between No Rust and Green Tech ensued when Green Tech refused to sell the property back to No Rust; the case was later removed to bankruptcy court after No Rust filed for Chapter 11 and then converted to Chapter 7.
- A Chapter 7 trustee, Sonya Slott, negotiated a settlement with Green Tech to resolve all disputes, including mutual releases and a procedure for selling the property and sharing proceeds.
- The Smith Entities (Don Smith and related business entities) objected to the settlement and presented a counterproposal, but both bankruptcy and district courts approved the trustee's settlement over their objections.
- Smith Entities appealed the approval, arguing legal and procedural errors by the bankruptcy court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Violation of distribution scheme and sale procedures | Settlement violated Bankruptcy Code provisions governing priority and sale | Settlement followed proper bankruptcy processes; no specific violations shown | Smith Entities forfeited argument by not explaining violation; argument rejected |
| Lack of full disclosure and premature approval | Settlement terms weren't fully disclosed; approved before discovery completed | Settlement disclosed sufficient terms; Code doesn't require discovery completed | Argument abandoned due to lack of authority and inadequate briefing |
| Sale of property not owned by estate | Bankruptcy court authorized sale of property in which estate had no interest | Estate had a cognizable interest under § 541; Smith Entities previously claimed interest | Argument forfeited; district court's logic accepted |
| Failure to approve counterproposal | Bankruptcy court should have approved Smith Entities' sure-thing offer | Court correctly applied "range of reasonableness" standard to approve settlement | Argument abandoned; no showing of error in court’s approval |
Key Cases Cited
- In re Hoffman, 22 F.4th 1341 (11th Cir. 2022) (sets standard for appellate review in bankruptcy appeals)
- In re Chira, 567 F.3d 1307 (11th Cir. 2009) (sets abuse of discretion standard for approving settlements in bankruptcy)
- In re Martin, 490 F.3d 1272 (11th Cir. 2007) ("lowest point in the range of reasonableness" test for settlements)
- In re Justice Oaks II, Ltd., 898 F.2d 1544 (11th Cir. 1990) (lists factors courts must consider in settlement approval)
- Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678 (11th Cir. 2014) (appellate abandonment of poorly developed arguments)
- Singh v. U.S. Att'y Gen., 561 F.3d 1275 (11th Cir. 2009) (requirements for adequate appellate briefing)
- In re Globe Mfg. Corp., 567 F.3d 1291 (11th Cir. 2009) (further clarification on briefing and abandonment)
