Court Opinion

ID: 2798112
Source: CourtListenerOpinion
Date Created: 2015-05-01 21:00:56.639999+00
Date Added: 2024-06-11T11:25:49.986169
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              MAY 01 2015

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

TIMOTHY L. BLIXSETH,                             No. 13-35190

              Appellant,                         D.C. No. 2:11-cv-00065-SEH

  v.
                                                 MEMORANDUM*
YELLOWSTONE MOUNTAIN CLUB,
LLC; YELLOWSTONE CLUB
CONSTRUCTION COMPANY, LLC;
YELLOWSTONE DEVELOPMENT,
LLC,

              Debtors - Appellees,

BRIAN A. GLASSER, Esquire, Trustee of
Yellowstone Club Liquidating Trust,

              Appellee,

BLUE SKY RIDGE, LLC,

              Debtor - Appellee,

CROSS HARBOR CAPITAL
PARTNERS, LLC; CREDIT SUISSE,

              Appellees.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
YELLOWSTONE MOUNTAIN CLUB,                   No. 13-35245
LLC; YELLOWSTONE CLUB
CONSTRUCTION COMPANY, LLC;                   D.C. No. 2:11-cv-00065-SEH
YELLOWSTONE DEVELOPMENT,
LLC,

            Debtors - Appellants,

BRIAN A. GLASSER, Esquire, Trustee of
Yellowstone Club Liquidating Trust,

            Appellant,

BLUE SKY RIDGE, LLC,

            Debtor - Appellant,

CROSS HARBOR CAPITAL
PARTNERS, LLC,

            Appellant,

  v.

TIMOTHY L. BLIXSETH,

            Appellee.

                 Appeal from the United States District Court
                         for the District of Montana
                  Sam E. Haddon, District Judge, Presiding

                    Argued and Submitted August 4, 2014
                            Pasadena, California

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

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      Appellant Timothy L. Blixseth (“Blixseth”) appeals the district court’s order

dismissing, for lack of appellate standing, his appeal from the bankruptcy court’s

order confirming the Third Amended Plan of Reorganization (“the Plan”). In a

cross-appeal, Yellowstone Mountain Club, LLC, et al. (“the Debtors”) argue that

the district court erred in denying their motion to dismiss Blixseth’s appeal on

grounds of equitable mootness. We reverse in part, affirm in part, and remand.

      (1)    To have standing to appeal an order of the bankruptcy court, an

appellant must show he is a “person aggrieved”—that is, that he is “directly and

adversely affected by the order of the bankruptcy court—that it diminish the

appellant’s property, increase its burdens, or detrimentally affect its rights.” Motor

Vehicle Casualty Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677
F.3d 869, 884 (9th Cir. 2012). One need not be a creditor of the estate to be a

person aggrieved. See, e.g., Fondiller v. Robertson (In re Fondiller), 707 F.2d 441,

442 (9th Cir. 1983).

      The exculpation clause strips Blixseth of identifiable, affirmative legal

claims, which are property. Called “choses in action” at common law, they have

potential economic value. See C.I.R. v. Banks, 543 U.S. 426, 435-36 (2005);

Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 807 (1985); United States v.

Stonehill, 83 F.3d 1156, 1159 (9th Cir. 1996). Blixseth is therefore directly and

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adversely affected pecuniarily by the order confirming the Plan and so has standing

to appeal it. See In re Thorpe, 677 F.3d at 884. Accordingly, we REVERSE the

district court’s order dismissing Blixseth’s appeal for lack of standing.

      (2)    Equitable “[m]ootness is a jurisdictional issue which [this Court]

review[s] de novo.” Baker & Drake, Inc. v. Pub. Serv. Comm’n of Nev. (In re

Baker & Drake, Inc.), 35 F.3d 1348, 1351 (9th Cir. 1994). Considerations in

determining whether an appeal of an order confirming a reorganization plan is

equitably moot include: whether the party seeking relief has diligently sought a

stay; whether the plan has been substantially consummated; and whether the rights

of third parties have intervened. In re Thorpe, 677 F.3d at 880. Of particular

relevance is “whether the bankruptcy court can [still] fashion effective and

equitable relief without completely knocking the props out from under the plan and

thereby creating an uncontrollable situation for the bankruptcy court.” Id.; see also

Spirtos v. Moreno (In re Spirtos), 992 F.2d 1004, 1006 (9th Cir. 1993).

      Blixseth did not seek a stay in this Court, and the Plan has been substantially

consummated. Whether Blixseth’s appeal as to the propriety of the exculpation

clause is equitably moot thus depends on whether the bankruptcy court can still

fashion effective and equitable relief short of vacating the Plan, an inquiry the

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district court did not undertake in denying the Debtors’ motion to dismiss

Blixseth’s appeal as equitably moot.

      We hold Blixseth’s appeal as to the exculpation clause is not equitably moot,

because it is apparent that one or more remedies is still available. See In re

Thorpe, 677 F.3d at 880.

      We therefore AFFIRM, albeit on different grounds, the district court’s

conclusion that Blixseth’s challenge to the exculpation clause is not equitably

moot. We REMAND with instructions to consider Blixseth’s challenges to the

exculpation clause in the first instance.

      (3)    As to Blixseth’s arguments that the bankruptcy court erred in

approving the Settlement Term Sheet and in denying Blixseth’s Rule 60(b) motion

for relief from the Confirmation Order and that Blixseth is therefore entitled to be

restored to the “status quo ante,” his appeal is equitably moot. The relief Blixseth

seeks as to these issues would require unraveling the Plan entirely. Because the

Plan has been substantially consummated, it is not now possible to give Blixseth

the broad remedies he seeks “without knocking the props out from under the Plan.”

See In re Thorpe, 677 F.3d at 880. His appeal as to these issues is therefore

equitably moot.

      The parties shall bear their own costs on appeal.

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AFFIRMED in part; REVERSED and REMANDED in part.

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