Iris Biotechnologies v. Heller Ehrman , 623 F. App'x 327 ( 2015 )


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  •                                                                            FILED
    NOT FOR PUBLICATION
    NOV 20 2015
    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    IRIS BIOTECHNOLOGIES, INC.,                      No. 13-16827
    Appellant,                         D.C. No. 3:12-cv-06232-JSW
    v.
    MEMORANDUM*
    HELLER EHRMAN LLP,
    Appellee.
    Appeal from the United States District Court
    for the Northern District of California
    Jeffrey S. White, District Judge, Presiding
    Submitted November 17, 2015**
    San Francisco, California
    Before: FERNANDEZ and M. SMITH, Circuit Judges, and MORRIS,*** District
    Judge.
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by 9th Cir. R. 36-3.
    **
    The panel unanimously concludes this case is suitable for decision
    without oral argument. See Fed. R. App. P. 34(a)(2).
    ***
    The Honorable Brian M. Morris, District Judge for the U.S. District
    Court for the District of Montana, sitting by designation.
    Heller Ehrman LLP (Heller) filed for bankruptcy on December 28, 2008.
    The bankruptcy court set April 27, 2009, as the claims bar date—the deadline to
    file a proof of claim against the bankruptcy estate. More than three years after that
    date, Iris Biotechnologies, Inc., (Iris) moved the bankruptcy court to permit it to
    file a late proof of claim against Heller. The bankruptcy court denied Iris’s motion,
    holding that its delay did not constitute “excusable neglect” under Federal Rule of
    Bankruptcy Procedure 9006(b)(1). On appeal, Iris argues that the bankruptcy court
    abused its discretion. Because the bankruptcy court applied the correct legal
    standard to well-supported findings of fact, we affirm.
    1. Iris argues that under Zilog, Inc. v. Corning (In re Zilog, Inc.), 
    450 F.3d 996
    (9th Cir. 2006), before a bankruptcy court may analyze whether a late-filing
    claimant’s neglect is “excusable,” it must first determine whether the claim was
    within the claimant’s “fair contemplation” as of the claims bar date. Iris is
    mistaken. The fair-contemplation test applies when determining whether a debt
    was discharged. See 
    Zilog, 450 F.3d at 1000
    . The bankruptcy code provides that a
    debt may be discharged if it “arose” before the date a reorganization plan was
    confirmed. 11 U.S.C. § 1141(d)(1)(A). Zilog merely reaffirmed and elaborated
    upon the long-recognized doctrine that a claim arises in this context “once it is
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    within the claimant’s ‘fair 
    contemplation.’” 450 F.3d at 1000-01
    (quoting Cal.
    Dep’t of Health Servs. v. Jensen (In re Jensen), 
    995 F.2d 925
    , 930 (9th Cir. 1993)).
    Here, the bankruptcy court did not hold that Iris’s claim was discharged, and
    Iris does not argue that its claim was not discharged. Rather, Iris argues that its
    delay in filing its proof of claim should be excused under Rule 9006(b)(1).
    Whether a delay is excusable under Rule 9006(b)(1) is analyzed using four factors
    enunciated in Pioneer Investment Services Co. v. Brunswick Associates Ltd.
    Partnership: “[1] the danger of prejudice to the debtor, [2] the length of the delay
    and its potential impact on judicial proceedings, [3] the reason for the delay,
    including whether it was within the reasonable control of the movant, and [4]
    whether the movant acted in good faith.” 
    507 U.S. 380
    , 395 (1993); see
    also Pincay v. Andrews, 
    389 F.3d 853
    , 855 (9th Cir. 2004). (We note that the third
    of these factors encompasses many of the same concerns as the fair-contemplation
    test.) The bankruptcy court rightly applied this test to determine whether Iris’s
    neglect was excusable.
    2. Iris argues that the bankruptcy court’s application of the excusable-neglect
    test to the facts was an abuse of discretion. Iris is mistaken. The court gave the
    heaviest weight to the third factor—the reason for the delay—and determined that
    Iris had more than enough notice that it might have a claim and sat on its rights for
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    no good reason. The purported malpractice took place in March and October 2008.
    The latest date at which Iris discovered it was August 2011. Iris had several
    previous opportunities at which discovery ought to have occurred, such as the July
    2009 letter informing Iris that Heller had elected to dissolve and wind up its
    operations and disengage from all patent and trademark matters. Even crediting the
    August 2011 date, however, Iris waited an entire year to file its proof of claim. The
    bankruptcy court observed that had Iris attended to its own interests sooner, even
    after the claims bar date, it might have granted Iris’s motion. But on these facts, the
    bankruptcy court held that Iris’s neglect was not excusable.
    The bankruptcy court analyzed all four factors of the excusable-neglect test
    and based its decision on factual findings that are amply supported by the record.
    The bankruptcy court did not abuse its discretion. The district court’s judgment is
    therefore
    AFFIRMED.
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