Iris Biotechnologies, Inc. v. Heller Ehrman Llp

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
IRIS BIOTECHNOLOGIES, INC.,
Appellant,
v.
HELLER EHRMAN LLP,
Appellee.
No. 13-16827
D.C. No. 3:12-cv-06232-JSW
MEMORANDUM*
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.
FILED
NOV 20 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* 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.

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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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