FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

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.

No. 12-35986

D.C. No.

11-CV-73-SEH

ORDER

Filed April 18, 2017

Before: Alex Kozinski, Richard A. Paez,

and Marsha S. Berzon, Circuit Judges.

Order
2 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

SUMMARY*

Bankruptcy / Sanctions

The panel filed an order: (1) denying appellant’s

counsel’s motion and amended motion for reconsideration of

the Appellate Commissioner’s orders awarding attorneys’

fees and non-taxable costs under Federal Rule of Appellate

Procedure 38 and 28 U.S.C. § 1927 in a bankruptcy case;

(2) denying requests for recusal, appointment of a new panel,

conversion of the matter to a criminal proceeding, transfer of

the matter to the United States Attorney, and holding of the

awards in abeyance; and (3) denying, on behalf of the court,

counsel’s suggestion for reconsideration en banc.

The panel had ordered appellant and his counsel to pay

appellees’ attorneys’ fees and costs in defending against the

appeal under Rule 38; ordered counsel to pay appellees’

attorneys’ fees and costs in defending against the appeal

under § 1927; and referred to the Appellate Commissioner the

determination of an appropriate amount of attorneys’ fees and

costs. The Appellate Commissioner entered orders awarding

fees and costs.

Denying counsel’s motion and amended motion for

reconsideration of the Appellate Commissioner’s orders, the

panel held that the Commissioner correctly declined to award

fees-on-fees under Rule 38 for the preparation of appellees’

statements regarding appellant’s pro se response and

counsel’s response to the court’s order to show cause against

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 3

them, and correctly awarded fees and costs under § 1927

against counsel for preparing the statements regarding

counsel’s response. The panel held that because Rule 38 is a

damage provision authorizing an award of “just damages,” an

award of fees and costs under Rule 38 must be limited to

appellees’ direct fees and costs for defending against the

frivolous appeal, and may not include the fees and costs

incurred regarding the imposition of sanctions. Agreeing

with the Eleventh Circuit, the panel held that, unlike Rule 38,

§ 1927 is a fee-shifting provision allowing an award of

fees-on-fees.

COUNSEL

Philip H. Stillman, Stillman & Associates, Miami Beach,

Florida, for Appellant.

Michael J. Flynn, Boston, Massachusetts, for himself.

Paul D. Moore, Duane Morris LLP, Boston, Massachusetts;

Michael R. Lastowski, Duane Morris LLP, Wilmington,

Delaware; Benjamin P. Hursh, Crowley Fleck PLLP,

Missoula, Montana; for Appellees CrossHarbor Capital

Partners, LLC, and CIP Sunrise Ridge Owner LLC.

James A. Patten, Patten Peterman Bekkedahl & Green PLLC,

Billings, Montana, for Appellee Yellowstone Mountain Club,

LLC.

Robert R. Bell, Mullin Hoard & Brown LLP, Amarillo,

Texas, for Appellees Brian A. Glasser as Trustee, and

Yellowstone Club Liquidating Trust.
4 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

ORDER

I

Background

We ordered TimothyL.Blixseth and his attorneyMichael

J. Flynn to pay appellees’ attorneys’ fees and costs in

defending against this appeal under Federal Rule of Appellate

Procedure 38, ordered Flynn to pay appellees’ attorneys’ fees

and costs in defending against this appeal under 28 U.S.C.

§ 1927, and referred to the Appellate Commissioner pursuant

to Ninth Circuit Rule 39-1.9 the determination of an

appropriate amount of attorneys’ fees and costs. See Blixseth

v. Yellowstone Mountain Club, LLC, 796 F.3d 1004, 1007–09

(9th Cir. 2015).1 We also ordered Blixseth and Flynn each to

pay $500 in damages to the Clerk of Court as reimbursement

for the costs incurred during this frivolous and bad-faith

appeal. Id. at 1009. Blixseth and Flynn each have paid $500

to the Clerk, as required.

1 Rule 38 provides: “If a court of appeals determines that an appeal is

frivolous, it may, after a separately filed motion or notice from the court

and reasonable opportunity to respond, award just damages and single or

double costs to the appellee.”

Section 1927 provides: “Any attorney or other person admitted to

conduct cases in any court of the United States or any Territory thereof

who so multiplies the proceedings in any case unreasonably and

vexatiously may be required by the court to satisfy personally the excess

costs, expenses, and attorneys’ fees reasonably incurred because of such

conduct.”
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 5

The Appellate Commissioner entered a second amended

order and amended orders (Docket Entry Nos. 148, 149, 150)

awarding attorneys’ fees and non-taxable costs as follows:

(1) $105,881.26 in favor of CrossHarbor Capital Partners,

LLC and CIP Sunrise Ridge Owner LLC and jointly and

severally against Blixseth and Flynn;

(2) $24,796.41 in favor of CrossHarbor Capital Partners,

LLC and CIP Sunrise Ridge Owner LLC and against Flynn;

(3) $42,031.81 in favor of Brian A. Glasser, Trustee, and

Yellowstone Club Liquidating Trust and jointly and severally

against Blixseth and Flynn;

(4) $9,065.50 in favor of Brian A. Glasser, Trustee, and

Yellowstone Club Liquidating Trust and against Flynn;

(5) $9,505.08 in favor of Yellowstone Mountain Club,

LLC and CIP Yellowstone Lending LLC and jointly and

severally against Blixseth and Flynn; and

(6) $712.50 in favor of Yellowstone Mountain Club, LLC

and CIP Yellowstone Lending LLC and against Flynn.

Flynn filed a motion and an amended motion for

reconsideration of the Appellate Commissioner’s second

amended order and amended orders. We deny Flynn’s

motion and amended motion for reconsideration (Docket

EntryNos. 151, 152). The Appellate Commissioner’s second

amended order and amended orders awarding attorneys’ fees

and non-taxable costs remain in effect.
6 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

The Appellate Commissioner correctly declined to award

attorneys’ fees and non-taxable costs under Rule 38 against

Blixseth and Flynn for preparing appellees’ statements

regarding Blixseth’s pro se response and Flynn’s response to

the court’s order to show cause against Blixseth and Flynn

(“fees-on-fees”), and correctly awarded fees and costs under

§ 1927 against Flynn for preparing the statements regarding

Flynn’s response. We publish this order to address the

availability of fees and costs for litigating sanctions under

Rule 38 and § 1927.

II

Discussion

Flynn objected to appellees’ requests for attorneys’ fees

for preparing joint statements regarding Blixseth’s pro se

response and Flynn’s response to the court’s order to show

cause. Flynn argued that the court may not include the

expense of litigating the order to show cause in the attorney’s

fees and non-taxable costs that the court ordered Blixseth and

Flynn to pay as a sanction, citing Haeger v. Goodyear Tire &

Rubber Co., 813 F.3d 1233, 1254 (9th Cir. 2016), cert.

granted, 2016 WL 2927901, 137 S. Ct. 30 (U.S. Sept. 29,

2016) (No. 15-1406), and In re S. Cal. Sunbelt Developers,

Inc., 608 F.3d 456, 466 (9th Cir. 2010).

A. Sunbelt Distinguishes Fee-Shifting Provisions From

Damages Provisions

In Sunbelt, thirteen creditors filed involuntary bankruptcy

petitions against two alleged debtors. See Sunbelt, 608 F.3d

at 460. After the petitions were dismissed, the alleged

debtors filed motions against the creditors for attorneys’ fees,
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 7

costs, and damages under 11 U.S.C. § 303(i) and against two

individuals who exercised control over the creditors for

sanctions under the court’s inherent power. Id.

2 The

bankruptcy court awarded fees and costs against the creditors

under § 303(i), including the fees and costs incurred by the

alleged debtors in litigating the post-dismissal motions. Id.

at 461. Relying on its inherent power, the bankruptcy court

also awarded sanctions against the controlling individuals,

and held them jointly and severally liable for the alleged

debtors’ attorneys’ fees and costs, including the fees and costs

incurred in litigating the motions. Id. The creditors and the

controlling individuals appealed. Id.

This court affirmed the judgments against the creditors,

holding that the bankruptcy court properly awarded fees-onfees because § 303(i) is a fee-shifting provision rather than a

sanctions statute such as Rule 11. Id. at 460, 462. The court

relied on Business Guides, Inc. v.Chromatic Communications

Enterprises, Inc., 498 U.S. 533, 553 (1991), and Cooter &

Gell v. Hartmarx Corp., 496 U.S. 384, 409 (1990), in which

the Supreme Court distinguished fee-shifting provisions,

where eligibility turns on the merits or outcome of the

litigation and costs are shifted for the litigation as a whole,

from sanctions statutes like the former version of Rule 11,

where eligibility for fees turned on whether a specific

pleading was well-founded and costs are shifted only for a

2 Section 303(i) provides: “If the court dismisses a petition under this

section other than on consent of all petitioners and the debtor, and if the

debtor does not waive the right to judgment under this subsection, the

court may grant judgment– (1) against the petitioners and in favor of the

debtor for– (A) costs; or (B) a reasonable attorney’s fee; or (2) against any

petitioner that filed the petition in bad faith, for– (A) any damages

proximately caused by such filing; or (B) punitive damages.”
8 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

discrete portion of the litigation. See Sunbelt, 608 F.3d at

462.

In Sunbelt, the court noted that courts have uniformly held

that time spent establishing the entitlement to and amount of

the fee is compensable under federal fee-shifting provisions,

and that it would be inconsistent with the policy of § 303(i)

to dilute the fee award by refusing to compensate time spent

establishing the rightful claim to a fee. Id. at 463. The court

also observed that, with respect to fee-shifting statutes, a

court should make only one determination of fee eligibility

and the fee award should encompass all aspects of the civil

action. Id. (citing Comm’r, INS v. Jean, 496 U.S. 154,

161–62 (1990) (fee-shifting statutes favor treating a case as

an inclusive whole, rather than as atomized line items;

approving award of fees-on-fees under federal fee-shifting

statute for preparing the fee application and for the ensuing

efforts to support the application)).3

3 The Sunbelt court stated that its conclusion was consistent with

Sternberg v. Johnston, 595 F.3d 937, 946, 948 (9th Cir. 2010), where the

court held that a debtor was not entitled to attorneys’ fees incurred in

pursuing a claim for damages for violation of the automatic stay under

11 U.S.C. § 362(k), because that provision permitted recovery of

attorneys’ fees as damages. Sunbelt stated that § 303(i), in contrast, is a

fee-shifting provision that permits the recovery of attorneys’ fees as

attorneys’ fees, not as damages. Although an en banc panel of this court

later overruled Sternberg in In re Schwartz-Tallard, 803 F.3d 1095,

1097–1101 (9th Cir. 2015), reading § 362(k) as a fee-shifting provision

rather than as a damages provision, that change in the law since Sunbelt

has no significance here.
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 9

B. Only Direct Costs May Be Awarded Pursuant To Certain

Sanctions Provisions

Sunbelt held otherwise, however, with respect to

sanctions under the court’s inherent power against the

controlling individuals. As to those sanctions, Sunbelt

determined that the bankruptcy court erred in holding the

individuals liable for the debtors’ fees and costs incurred on

the § 303(i) motions. See Sunbelt, 608 F.3d at 466. Only the

direct costs of opposing an offending pleading or motion, and

not fees-on-fees, may be included in an award under the

court’s inherent power, we concluded, stating:

In Cooter & Gell . . . the Supreme Court held

that Federal Rule of Civil Procedure 11 did

not authorize recovery of attorney’s fees

incurred to defend an award of Rule 11

sanctions on appeal. Relying on language in

the version of Rule 11 in effect at that time,

the Court reasoned that Rule 11 sanctions

were limited to “those expenses directly

caused” by the improper filing, which did not

include costs of appeal. Id. We extended that

principle in Lockary v. Kayfetz, 974 F.2d 1166

(9th Cir. 1992). In Lockary, the district court

imposed sanctions under its inherent power

rather than Rule 11. Id. at 1170. The

sanctions included not only the costs incurred

by the defendants to oppose the plaintiffs’

improper filings, but also the “defendants’

cost of preparing and supporting their motion

for sanctions.” Id. at 1177. The law firm

appealed and, relying on Cooter & Gell, we

reversed:
10 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

Cooter & Gell suggests that

the trial court should limit

sanctions to the opposing

party’s more “direct” costs,

that is, the costs of opposing

the offending pleading or

motion. We thus find that the

district court erred in

including the defendants’

attorneys’ fees for preparing

the motion for sanctions in the

sanctions it imposed.

Id. at 1178.

Sunbelt, 608 F.3d at 466–67.4

C. Rule 38 Is A Damage Provision Authorizing Award of

“Just Damages”

Blixseth and Flynn were not sanctioned under the court’s

inherent power, so Sunbelt is not directly applicable. Instead,

we sanctioned Blixseth and Flynn under Rule 38 and

sanctioned Flynn under § 1927. See Blixseth, 796 F.3d at

1007–09.

4 The former version of Rule 11 discussed in Cooter & Gell provides

that, if a pleading is signed in violation of the Rule, the court shall impose

upon the attorney or client “an appropriate sanction, which may include

an order to pay to the other party or parties the amount of the reasonable

expenses incurred because of the filing of the pleading . . . including a

reasonable attorney’s fee.” Cooter & Gell, 496 U.S. at 392. The

December 1, 1993, post-Cooter &Gell amendment to Rule 11 specifically

allows a district court to include the expenses associated with sanctions

proceedings. See Margolis v. Ryan, 140 F.3d 850, 854–55 (9thCir. 1998).
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 11

Under Rule 38, appellees’ fees and non-taxable costs for

preparing the statements regardingBlixseth’s pro se response

and Flynn’s response to the court’s order to show cause may

not be awarded. See Lyddon v. Geothermal Props., Inc.,

996 F.2d 212, 214 (9th Cir. 1993) (based on an analogy to the

former, pre-amendment version of Rule 11, declining to

award under Rule 38 fees associated with computation of

sanctions or cross-appeal of denial of sanctions). The

language of Rule 38 authorizes an award of “just damages”

if a court determines that an appeal is frivolous. “Just

damages” under Rule 38 may include attorneys’ fees incurred

in defending against the frivolous issues or frivolous portions

of an appeal. See Gaskell v. Weir, 10 F.3d 626, 629 (9th Cir.

1993); McConnell v. Critchlow, 661 F.2d 116, 118 (9th Cir.

1981); see also Sun-Tek Indus. v. Kennedy Sky-Lites, Inc.,

865 F.2d 1254, 1255 (Fed. Cir. 1989) (unlike the award of

attorneys’ fees under fee-shifting statutes, under Rule 38 “the

only inquiry in determining the propriety of the amount of

attorney fees to be paid as damages by an appellant who has

filed a frivolous appeal is whether the appellee actually

incurred the fees sought in defending against the appeal.”). 

But, absent specific language or indication to the contrary,

see Schwartz-Tallard, 803 F.3d at 1099, a statute permitting

an award of “damages” is not a fee-shifting statute, and does

not permit an award of fees for obtaining the “damages.”

The award of fees and costs under Rule 38 thus must be

limited to appellees’ direct fees and costs for defending

against the frivolous appeal, and may not include the fees and

costs incurred regarding the imposition of sanctions. See

Cooter & Gell, 496 U.S. at 406–07; Sunbelt, 608 F.3d at

466–67 & n.4; Lyddon, 996 F.2d at 214; Lockary, 974 F.2d at

1178; see also Haeger, 813 F.3d at 1242, 1254 (affirming

award of attorneys’ fees and costs incurred after a misleading
12 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

discoveryresponse as a sanction under court’s inherent power

to compensate party for losses sustained as a result of

misconduct).

D. Section 1927 Is A Fee-Shifting Provision Allowing

Award Of Fees-On-Fees

We conclude otherwise concerning fees-on-fees for

sanctions imposed under § 1927. That section does not refer

to “damages” as Rule 38 does. Instead, it provides that a

court may include the excess “costs, expenses, and attorneys’

fees” that the party victimized by the sanctionable conduct

“incurred because of such conduct.” A different analysis

therefore applies to the award under § 1927, against Flynn

alone, of the fees incurred in preparing appellees’ statements

regarding Flynn’s response to the order to show cause.

With regard to § 1927, we agree with the analysis set

forth persuasively in Norelus v. Denny’s, Inc., 628 F.3d 1270,

1297–1302 (11th Cir. 2010). Like Norelus, we conclude that

the costs of obtaining sanctions may be included in a

sanctions award under § 1927.

Norelus emphasized that the plain language of § 1927

permits recovery of fees “incurred because of [the

sanctionable] conduct,” and that were there no sanctionable

conduct, there would have been no proceeding to impose

sanctions, and no fees incurred in that proceeding. Id. at

1298. So the fees expended to obtain the sanctions award are,

in the statute’s terms, “incurred because of [the sanctionable]

conduct.” Id. The Norelus court further noted that excluding

the costs of obtaining the sanctions award would not fully

compensate the harmed party for the wrongful conduct it had

suffered. Id.; see also Haynes v. City & Cnty. of San
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 13

Francisco, 688 F.3d 984, 987–88 (9th Cir. 2012) (the purpose

of § 1927 is to compensate victims of attorney’s

malfeasance).

The holding of Norelus is consistent with the analysis

ordinarily applied in other cost- and fee-shifting situations to

allow parties to recover the cost of establishing their right to

and the amount of attorneys’ fees, or fees-on-fees. See

Norelus, 628 F.3d at 1301; see also Jean, 496 U.S. at 161–62;

Sunbelt, 608 F.3d at 462–64 & n.4. In allowing awards of

fees-on-fees, courts have relied on the language and purpose

of the fee-shifting provision at issue, reasoning that not

allowing fees-on-fees would undermine congressional

policies governing attorneys’ fees awards. See Norelus,

628 F.3d at 1301.

Likewise, § 1927 may be characterized as a fee-shifting

provision, despite its sanctions trigger. Id. (“[I]n other costand fee-shifting situations . . . we have allowed parties to

recover the cost of establishing their right to, and the amount

of attorney’s fees. . . . The same reasoning supports the same

rule in the present circumstances [in awarding fees under

§ 1927].”). Thus, § 1927 differs from the former version of

Rule 11 discussed in Cooter & Gell, which authorized the

award only of expenses incurred with regard to a discrete

improper pleading, and therefore did not permit recovery of

attorneys’ fees incurred to defend an award of Rule 11

sanctions on appeal. See Cooter & Gell, 496 U.S. at 406–07;

see also Sunbelt, 608 F.3d at 464 n.4 (rejecting contention

that award of fees pursuant to a fee-shifting provision is

controlled by Cooter & Gell). Section 1927 instead

authorizes the award of excess costs, expenses, and attorneys’

fees for the litigation as a whole, reasonablyincurred because

of an attorney’s unreasonable and vexatious multiplication of
14 BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB

the entire proceedings, including fees-on-fees. See Norelus,

628 F.3d at 1298. Like other fee-shifting provisions, and in

contrast to the former version of Rule 11 discussed in Cooter

& Gell, § 1927 may shift the entire financial burden of an

action’s defense, including attorneys’ fees, if the entire course

of proceedings was unwarranted and should not have been

commenced or pursued. See Lewis v. Brown & Root, Inc.,

711 F.2d 1287, 1291–92 (5th Cir. 1983), clarified on

reconsideration, 722 F.2d 209, 210 (5th Cir. 1984); see also

Jean, 496 U.S. at 161–62; Sunbelt, 608 F.3d at 462–64 & n.4.

The reasoning of Norelus is consistent with Sunbelt and

this court’s fees-on-fees case law. Accordingly, we follow

Norelus in holding that § 1927 allows an award of attorneys’

fees incurred in obtaining a sanctions award. See Norelus,

628 F.3d at 1297–1302. Appellees’ attorneys’ fees and nontaxable costs incurred in preparing appellees’ statements

regarding Flynn’s responses to the order to show cause are

awardable against Flynn under § 1927. Id.

III

Conclusion

We deny Flynn’s motion and amended motion for

reconsideration (Docket Entry Nos. 151, 152) of the

Appellate Commissioner’s second amended order and

amended orders (Docket Entry Nos. 148, 149, 150). The

Appellate Commissioner’s second amended order and

amended orders awarding attorneys’ fees and non-taxable

costs remain in effect. Flynn’s requests in the motion and

amended motion for reconsideration for recusal of this panel,

appointment of a new panel, conversion of this matter to a

criminal proceeding, transfer of the matter to the United
BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB 15

States Attorney, and holding of the awards in abeyance are

denied. Flynn’s suggestion for reconsideration en banc is

rejected on behalf of the Court. See 9th Cir. Gen. Order 6.11.

No further filings byBlixseth or Flynn will be entertained

in this closed appeal unless specifically requested by further

order of the court.