FILED
UNITED STATES COURT OF APPEALS DEC 19 2013
MOLLY C. DWYER, CLERK
FOR THE NINTH CIRCUIT U.S. COURT OF APPEALS
STAN LEE MEDIA, INC., a Colorado No. 12-55405
corporation,
D.C. No. 2:11-cv-06861-SVW-SS
Plaintiff - Appellant, Central District of California,
Los Angeles
v.
ORDER AMENDING
CONAN SALES CO. LLC, a Delaware MEMORANDUM DISPOSITION
limited liability company; et al., AND DENYING PETITION FOR
REHEARING AND
Defendants - Appellees. REHEARING EN BANC
Before: PREGERSON, WARDLAW, and TALLMAN, Circuit Judges.
The memorandum disposition filed on October 21, 2013, is hereby amended
and replaced by the attached amended memorandum disposition. With this
amendment, the panel has voted unanimously to deny the petitions for panel
rehearing and rehearing en banc.
The full court has been advised of the petition for rehearing en banc and no
judge of the court has requested a vote on whether to rehear the matter en banc.
Fed. R. App. P. 35.
The petition for panel rehearing and the petition for rehearing en banc are
DENIED. No further petitions shall be entertained.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT DEC 19 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
STAN LEE MEDIA, INC., a Colorado No. 12-55405
corporation,
D.C. No. 2:11-cv-06861-SVW-SS
Plaintiff - Appellant,
AMENDED
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
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contrary, the record demonstrates that Kobayashi was duly authorized to act on
SLMI’s behalf.
We also agree with the district court that notice of the settlement was proper
under Federal Rule of Bankruptcy Procedure (FRBP) 2002(a)(3). The settlement
was not a disguised sale, despite SLMI’s argument to the contrary. SLMI also
asserts that the settlement involved a sale of assets outside the ordinary course of
business that required notice to shareholders under 11 U.S.C. § 363(b)(1) and
FRBP 9019(a). The cases it cites for this proposition are factually distinguishable
because they involved the settlement of the debtor’s or trustee’s own cause of
action after receiving third-party bids for those claims higher than the proposed
settlement amount. See In re Mickey Thompson Entm’t Grp., Inc., 292 B.R. 415,
421 (9th Cir. BAP 2003); In re Moore, 608 F.3d 253, 264-65 (5th Cir. 2010). The
facts here are materially different: this was a settlement of CSC’s claim,1 not
SLMI’s; CSC held a secured interest in the intellectual property rights that SLMI
held; even assuming that a third-party could have bid on the secured assets, there
1
CSC had originally sold the intellectual property rights to SLMI for
approximately $4 million in SLMI shares. The intellectual property rights secured
the transaction in case the share price fell below a specified level. When SLMI
filed for bankruptcy a short time later, CSC sought to lift the automatic stay to
foreclose on its secured interest in the intellectual property it had transferred to
SLMI. To settle the relief-from-stay dispute, CSC agreed to pay SLMI $275,000,
which was used to pay the costs of administering the estate.
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were no bids, let alone overbids, for the intellectual property rights; and SLMI’s
unsecured creditors, who were highly motivated to maximize the value of the
estate, helped negotiate and supported the settlement. On these facts, the
bankruptcy court did not err by requiring notice only under FRBP 2002(a)(3).
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
5
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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