N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT In re : YELLOW STONE M OUNTAIN C LUB , LLC , De

btor, B R IAN A. GLASSER ; Truste e of the Ye llowstoneC lub Liquida ting Trust, Plaintiff - Appe lle e , v. TIM OTHY L. B LIXSETH; e t a l., De fe nda

nts - Appe lla

nts. No. 14-35159

D.C . No. 2:12-c v-00053-SEH M EM OR ANDUM *

In re : YELLOW STONE M OUNTAIN C LUB , LLC , De

btor, B R IAN A. GLASSER :, Truste e of the Ye llowstoneC lub Liquida ting Trust, No. 14-35160

D.C . No. 2:13-c v-00068-SEH



# FIL ED OCT 09 2014 M OLLY C. DW Y ER, CLERK U . S
. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.Plaintiff - Appe lle e ,

v. TIM OTHY L. B LIXSETH, De fe nda

nt - Appe lla

nt. Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of M o nta

na Sam E. Ha ddon, Distric t

Judge , Pre siding Argue d and Subm itte d August 5, 2014 Pa sa de n a , C a l ifornia B e fore : KOZINSKI, C hie f Judge , a nd PAEZ a

nd B ER ZON, C irc uit Judge s . Appe lla nts Tim othy

L. B lixse th (“ B lixse th” ), C a sa 20 LLC , a

nd Ta m arindo LLC (c o lle c tive ly

“ D e fe n da

nts” ) a ppe a l from

the distric t c ourt’ s orde r dism issing a s m oot the ir a

p pe a l from

the ba nkruptc y c ourt’ s de nia l of the ir m otion to vac ate a pre l im ina ry injunc tion. B lixse th a lso a ppe a ls the distric t c ourt’ s orde r finding him in c i vil c onte m

pt. 1. W e a ffirm

the distric t c ourt’ s ruling tha t De fe nda nts’ a ppe a l of the ba nkruptc y c ourt’ s de nia l of the m otion to vac ate is m oot. W he re a pa rty se e ks injunc tive re lie f but “ the a c tivitie s sought to be e n joine d a lre a d

y hav e oc c urre d, and the a ppe l late c ourts c annot undo wha t ha s a lre a dy

be e n done , the a c tion is m oot, a nd m ust be dism isse d.” Foste r v . C arson , 347 F.3d 742, 746 (9th C ir. 22003); a c c ord Frie nds of the Earth, Inc . v . Be rgland

, 576 F.2d 1377, 1379 (9th C ir. 1978). De fe nda

nts’ a ppe a l is m oot be c a

use B lixse th ha s a lre a dy

viola te d the injunc tion by

se lling theTam arindo prope rty and we c annot undo the

sa l e . 2. De fe nda

nts a rgue tha t the ir a ppe a l is not moot be c a

use , in the ir vie w, if we we re to va c ate the injunc t ion, thefinding of c o nte m pt would fa ll with it. It is true tha t the inva lidity

of a n unde rly ing injunc tive orde r m ay be ra ise d a s a de fe nse in c i vil c onte m

pt proc e e d i ngs. K

irk land v . Le gion Ins. C

o. , 343 F.3d 1135, 1142–43 (9th C ir. 2003); S c ott v . Fe tze r C

o. , 643 F.2d 670, 675 (9th C ir. 1981). Howe ve r, he re , the ba

nkruptc y c ourt’ s de n ia l of the m o tion to va c ate wa s not the orde r unde rly ing thefinding of c onte m pt. De fe n da

nts ha d pre v iously

c onse nte d to an injunc tion tha

t would re m a in in e ffe c t until e ntry of judgm e nt. The orde r unde rly ing the c o nte m

p t finding is the

orde r a pproving c ontinua

tion of the stipula te d injunc tion. Although the stipula t ion pre se rve d

De fe nda nts’ right to c ha lle nge the proprie t

y of the injunc t ion, until the c ourt rule d on a

ny suc h c ha lle nge , the injunc t ion re m a ine d in forc e . De fe nda nts do not c ha lle nge the va lidity of the orde r a

pproving thestipula

t e d injunc tion. Theonly

orde r the y c ha lle nge is the ba

nkruptc y c ourt’ s de nia l of the ir m otion to vac ate the injunc tion, an orde r that wa s e nte re d a fte r the c onte m p tuous c o nduc t oc c urre d. Whe the r or not the b ankruptc y c ourt e rre d in tha t orde r ha s no e ffe c t on theva lidity of the 3c onte m

p t finding. There fore , our re vie w of the orde r De fe nda nts c ha lle nge c annot provide the m

with a ny e ffe c tua l re lie f, and the ir a ppe a l from

tha t orde r is thus m oot. 3. W e none the le ss a gre e with B lixse th tha t the issue s ra ise d

in the a ppe a l of the c onte m

pt orde r are “ c lose ly

re l ate d” to the issue s ra ise d in the a ppe a l of the m otion to vac ate , a

nd tha t the a ppe a l of the c onte m

pt orde r is the re fore “ inc ide nt to” t he a ppe a l of the m otion to vac ate . Diamontine y v . Borg , 918 F.2d 793, 796–97 (9th C ir. 1990) (quoting Dollar Re n t A C ar of W ashington, Inc . v . Trav e le rs Inde m. C o. , 774 F.2d 1371, 1376 (9th C ir. 1985)). W e the re fore have jurisdic t ion ove r the a ppe a l of the c onte m

pt orde r. Id. 4. W e re

je c t B lixse th’ s a

rgum e nt tha

t the sa n c t ions im

p ose d in the c onte m p t orde r we re punitive and tha t the c o nte m

pt ruling wa s the re fore c rim ina l in na ture . “ [A] c onte m

pt sa nc tion is c onside re d c ivil if it is rem e d ia l, a n d for the be ne fit of the c om

pla ina nt ” and c rim ina l if it “ is punitive , to vindic ate the a uthority of the c ourt.” Int’l Union, Unite d Mine W o rk e rs of Am. v . Bagw e ll , 512 U.S. 821, 827-28 (1994) (interna l quota tion m arks om itte d). The distric t c ourt’ s c onte m pt orde r provide d for: (1) striking B lixse th’ s a nswe r; (2) e nte ring de fa

u lt a ga inst B lixse th on C ount III; (3) de e m ing a dm itte d the a l le gations of C ount III of the First Am e nde d C om

pla int; a nd (4) finding B lixse th lia b le for the gre ate r of 4$13,820,139.84 or the va lue of the Tam arindo prope rty . Nota bly , the orde r a lso re quire d B lixse th to post a bond e qua l to thegre ate r of the va lue of the prope rty or $13,820,139.84. 1 If the distric t c ourt’ s sa nc tions truly

te rm inate d the c a se with re spe c t to C ount III, the re would beno re a son to a lso re q uire B lixse th to post a bond. W e the re fore c onstrue the distric t c ourt’ s orde r a s im posing thete rm inating sa nc tions a nd the bond re quire m e nt a s a lte rnative s to e a c h othe r. In othe r words, B lixse th m a

y avoid thete rm inating sa

nc tions by

posting the

bond. 5. C onstruing the

distric t c ourt’ s orde r in this manne r, the sa n c t ions we re re m e dia l in na

ture . B lixse th’ s sa le of the Tam a rindo prope rty substa

ntia lly im pa ire d the Ye l lowstone C lub Liquida ting Trust’ s (“ Ye l lowstone ” ) a bility to obta in a ny re l ie f on C ount III, the re by de priving it of its inc e ntive to litiga te its c la im . The bond would re store Ye llowstone ’ s a bility to re c ove r on C ount III a nd is the re fore re m e dia l. Alte rnative ly , in thee ve nt tha t B lixse th doe s not post the bond, the t e rm inating sa

nc tions c om

pe nsate Ye llowstoneby

e lim inat ing thene e d

for it to e xpe nd re sourc e s litiga

ting a c la im for whic h it ha s little c ha nc e of obta i ning a

ny re lie f should it preva il. W e the re fore c onc l ude tha t the c o nte m

pt orde r wa s c ivil in

1 The distric t c ourt furthe r re quire d B lixse th to “ a c c ount fully for the re c e ipt, use , disposition or tra

nsfe r of any

of the proc e e ds of the sa le of the Tam arindo” prope rty . 5nature . W e have re vie we d B lixse th’ s re m a ining a rgum e nts a

nd hold tha

t the y are without m e rit. AFFIRM E D.

6