Charlie Hinduja, Varsha D. Hinduja v. Arco Products Co.

Charlie Hinduja and Varsha Hinduja appeal the district court’s order dismissing their complaint against ARCO Products Company and others. The district court determined that a stipulation, which incorporated the terms of a settlement between the Hindujas and ARCO, had itself been incorporated into and made an order of the bankruptcy court. The district court, therefore, declared that it could not grant relief because “bankruptcy court orders can only be interpreted for meaning, or for a violation of the order, by the court that issued the order.” We reverse.

BACKGROUND

Hinduja and ARCO entered into franchise agreements for an AM./P.M. Mini-Market and a gasoline station located in Santa Barbara, California. In August of 1992, ARCO gave Hinduja notice that his franchise agreements were being terminated because he had violated their terms. In December of 1992, Hinduja executed a release of claims against ARCO in exchange for ARCO’s agreement to allow him a limited opportunity to attempt to assign the franchise agreements to another party (the Agreement and Release). The Agreement and Release provided that if an assignment was not timely made, ARCO could take possession of the…