FILED
NOT FOR PUBLICATION OCT 21 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
STAN LEE MEDIA, INC., a Colorado No. 12-55405
corporation,
D.C. No. 2:11-cv-06861-SVW-SS
Plaintiff - Appellant,
v. MEMORANDUM*
CONAN SALES CO. LLC, a Delaware
limited liability company; CONAN
PROPERTIES INTERNATIONAL LLC, a
Delaware limited liability company;
PARADOX ENTERTAINMENT INC., a
Delaware corporation; PARADOX
ENTERTAINMENT AB, a Sweden
corporation; FREDRIK MALMBERG;
LUKE LIEBERMAN, personal
representative of the Estate of Arthur M.
Lieberman; JUNKO KOBAYASHI; GILL
CHAMPION,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted October 9, 2013
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Circuit Rule 36-3.
Pasadena, California
Before: PREGERSON, WARDLAW, and TALLMAN, Circuit Judges.
Stan Lee Media, Inc. (SLMI) appeals from an order dismissing its action
seeking to set aside a decade-old settlement approval order (Settlement Order)
entered by the U.S. Bankruptcy Court in conjunction with SLMI’s prior
bankruptcy proceeding. Pursuant to the Settlement Order, SLMI transferred
ownership of intellectual property rights associated with the fictional character
“Conan the Barbarian” to Conan Sales Co., LLC (CSC). In the current litigation,
SLMI seeks to recoup those intellectual property rights through Federal Rule of
Civil Procedure 60 relief. We have jurisdiction under 28 U.S.C. § 1291, and we
affirm.
We review de novo the district court’s denial of a motion to set aside an
order as void under Rule 60(b)(4). Export Grp. v. Reef Indus., Inc., 54 F.3d 1466,
1469 (9th Cir. 1995). The settlement order is not void. SLMI presented
insufficient evidence that Kobayashi or Lieberman adversely dominated SLMI, or
that any such adverse domination influenced an otherwise arms-length negotiation
between CSC and the unsecured creditors’ committee, both of which were
represented by independent legal counsel. And despite SLMI’s argument to the
contrary, the record demonstrates that Kobayashi was duly authorized to act on
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SLMI’s behalf. We also agree with the district court that notice of the settlement
was proper under Federal Rule of Bankruptcy Procedure 2002(a)(3). The
settlement was not a disguised sale, and thus SLMI’s shareholders were not
entitled to notice. SLMI’s remaining arguments do not raise any of the
jurisdictional or due process concerns that alone permit Rule 60(b)(4) relief. See
U.S. Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 271 (2010) (“Rule 60(b)(4) applies
only in the rare instance where a judgment is premised either on a certain type of
jurisdictional error or on a violation of due process[.]”). No such violation
occurred here.
The district court did not abuse its discretion in denying relief under Rule
60(b)(6). See United States v. Holtzman, 762 F.2d 720, 725 (9th Cir. 1985). Rule
60(b)(6) is a catch-all provision that should be used “sparingly as an equitable
remedy to prevent manifest injustice.” United States v. Alpine Land & Reservoir
Co., 984 F.2d 1047, 1049 (9th Cir. 1993). SLMI’s allegations on this issue are
largely repetitive of its unpersuasive allegations in support of its request for Rule
60(b)(4) relief. Furthermore, Kobayashi, as an SLMI officer of the debtor in
possession, had no duty to seek 11 U.S.C. § 327 authorization for her continued
employment. See 3 Collier on Bankruptcy ¶ 327.02[6][c] (Alan N. Resnick &
Henry J. Sommer, eds., 16th ed. 2013) (“The general view is that officers of the
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debtor are not professionals whose employment must be approved by the court.”).
There was also no violation of 11 U.S.C. § 510(b)’s mandatory subordination
requirement because CSC was a secured creditor properly seeking to foreclose on
the asset securing the debt in default. Nor has SLMI demonstrated manifest
injustice. See Alpine Land & Reservoir Co., 984 F.2d at 1049.
Nor did the district court abuse its discretion in denying Rule 60(d)(3) relief
based on fraud on the court. See Appling v. State Farm Mut. Auto. Ins. Co., 340
F.3d 769, 780 (9th Cir. 2003). To establish fraud on the court, a party must
demonstrate by clear and convincing evidence the existence of an “unconscionable
plan or scheme . . . designed to improperly influence the court in its decision.”
England v. Doyle, 281 F.2d 304, 309 (9th Cir. 1960). All of SLMI’s fraud
allegations are based on non-disclosures, which are generally insufficient to
support a claim of fraud on the court. See Appling, 340 F.3d at 780. Moreover,
SLMI failed to present clear and convincing evidence of an “unconscionable plan
or scheme.” See England, 281 F.2d at 309. Even if SLMI had demonstrated a
“colorable” claim of fraud, which it did not, it was not automatically entitled to
discovery. See Pearson v. First NH Mortg. Corp., 200 F.3d 30, 35 (1st Cir. 1999)
(“[O]nce the record evidence demonstrates a ‘colorable’ claim of fraud, the court
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may exercise its discretion to permit preliminary discovery.”). The district court
did not abuse its discretion in denying discovery. See id.
Finally, the district court properly dismissed SLMI’s remaining counts in the
complaint. Even assuming that SLMI could have proceeded on its additional
claims without first setting aside the Settlement Order, which we think unlikely, it
unequivocally acquiesced on the record, on several occasions, to the district court’s
decision to convert SLMI’s complaint into a Rule 60 motion for relief. See
Mendoza v. Block, 27 F.3d 1357, 1360 (9th Cir. 1994) (refusing to reverse the
district court’s decision to resolve questions of fact without a jury where appellant
had “stated unequivocally that he had no objection to the suggested procedure”).
SLMI has thus failed to preserve any argument to the contrary. See id. Once the
district court properly denied the motion to set aside the ten-year-old Settlement
Order, that was the end of the case.
AFFIRMED.
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