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Blixseth v. Yellowstone Mountain Club, LLC

United States Court of Appeals, Ninth Circuit

February 18, 2014

TIMOTHY L. BLIXSETH, Appellant,
v.
YELLOWSTONE MOUNTAIN CLUB, LLC; AD HOC GROUP OF CLASS B UNIT HOLDERS; CIP SUNRISE RIDGE OWNER LLC; CIP YELLOWSTONE LENDING LLC; CROSSHARBOR CAPITAL PARTNERS, LLC; MARC S. KIRSCHNER; CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH; YELLOWSTONE CLUB LIQUIDATING TRUST, Appellees

Argued and Submitted November 5, 2013, Seattle, Washington

Page 1216

[Copyrighted Material Omitted]

Page 1217

Appeal from the United States District Court for the District of Montana. D.C. No. 2:11-cv-00073-SEH, Sam E. Haddon, District Judge, Presiding.

Michael James Flynn, Sr., Rancho Santa Fe, CA (argued), Phillip H. Stillman, Stillman & Associates, Miami Beach, FL, Patrick T. Fox, Doubek Pyfer & Fox, LLP, Helena, MT, Christopher J. Conant, Conant Law LLC, Denver, CO and Michael J. Ferrigno, Law Office of Michael Ferrigno, PLLC, Meridian, ID, for Appellant.

James A. Patten, Patten, Peterman, Bekkedahl & Green, PLLC, Billings, MT (argued), Michael R. Lastowski, Duane Morris LLP, Wilmington, DE, Robert R. Bell, Mullin, Hoard & Brown, Amarillo, TX and Benjamin P. Hursh, Crowley Fleck, PLLP, Missoula, MT for Appellees.

Before: KOZINSKI, Chief Judge, PAEZ and BERZON, Circuit Judges.

OPINION

Page 1218

PER CURIAM

Timothy Blixseth sounds the clarion call of many a disappointed litigant: " It's not fair!" He insists that the judge who presided over the administration of the Yellowstone Mountain Club ski resort's bankruptcy was biased against him and should have recused himself. The bankruptcy judge denied the recusal motion and the district court affirmed. Blixseth has now filed a blunderbuss appeal.

I

Blixseth and his ex-wife founded Yellowstone Mountain Club, a ski and golf resort built on the twin pillars of luxury and exclusivity. A haven for the ultra-wealthy, Yellowstone offers " Private Powder" : over 2,200 acres of skiable terrain available only to club members and their invited guests. See Yellowstone Club, Ski, http://goo.gl/tfWQ5n. It was at one point the only private ski area in the world. See In re BLX Group, Inc., 419 B.R. 457, 460 (Bankr. D. Mont. 2009). In 2005, Yellowstone borrowed $342 million. Id. at 461. The same day, over $200 million of this money was " disbursed by Blixseth to various personal accounts and payoffs benefitting Blixseth and [his ex-wife] personally." Id. Unsurprisingly, Yellowstone eventually filed for bankruptcy.

Blixseth objected to the proposed bankruptcy settlement plan (the Plan), arguing that his ex-wife and others were the cause of Yellowstone's financial problems. See In re Yellowstone Mountain Club, LLC, 436 B.R. 598, 641-44 (Bankr. D. Mont. 2010), amended in part by In re Yellowstone Mountain Club, LLC, No. 08-61570-11, 2010 WL 3504210 (Bankr. D. Mont. Sept. 7, 2010). The bankruptcy court disagreed. It found that Blixseth had misappropriated Yellowstone's cash and property for his personal use and that his fraudulent intent in doing so " could not be more clear." Id. at 657-64. The bankruptcy court entered a $40 million judgment against Blixseth--the amount the court determined was necessary to pay off certain classes of creditors. Id. at 679. The district court reversed on narrow grounds, directing the bankruptcy court to give ...


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