Court Opinion

ID: 2721447
Source: CourtListenerOpinion
Date Created: 2014-08-27 21:01:29.789197+00
Date Added: 2024-06-11T10:02:46.020022
License: Public Domain

FILED
                            NOT FOR PUBLICATION                            AUG 26 2014

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

                            FOR THE NINTH CIRCUIT

In the Matter of: BLX GROUP, INC.,               No. 13-35122

              Debtor,                            D.C. No. 2:12-cv-00042-SEH

TIMOTHY L. BLIXSETH,                             MEMORANDUM*

              Appellant,

  v.

CARL A. EKLUND, Esquire, Chapter 11
Trustee of BLX Group, Inc.,

              Appellee.

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

                        Argued and Submitted August 5, 2014
                                Pasadena, California

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

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Appellant Timothy L. Blixseth appeals the district court’s order dismissing

his appeal of the bankruptcy court’s order confirming the Modified Third

Amended Plan of Liquidation (“the Plan”) for the BLX Group, Inc. Bankruptcy

Estate (“the Estate”). We affirm the dismissal of the appeal.

      (1)    An appellant must notice an appeal of a final bankruptcy court order

within fourteen days of the order’s entry. Fed. R. Bankr. P. 8002(a). A bankruptcy

court order is final where it “(1) ‘finally determines the discrete issue to which it is

addressed,’ and (2) ‘resolves and seriously affects substantive rights.’” Duckor

Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 780 (9th

Cir. 1999) (quoting Elliott v. Four Seasons Props. (In re Frontier Props., Inc.),

979 F.2d 1358, 1363 (9th Cir. 1992)). Applying this two-prong test, P.R.T.C. held

that an order assigning a debtor’s legal claims against a third party to its largest

creditor was “final.” See id. at 776–77, 780.

      The August 30, 2011 Assignment Order transferring the Estate’s legal

claims against Blixseth to the Yellowstone Club Liquidating Trust (“YCLT”) was

likewise “final.” See id. at 780. That order expressly declared the assignment “in

full force and effect notwithstanding confirmation of any plan of reorganization or

liquidation, or any dismissal or conversion of this proceeding to a proceeding

under Chapter 7 of the Bankruptcy Code.” Under the first P.R.T.C. prong, that

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language “finally assigned the assets,” i.e. the claims, to YCLT, because, even

though the bankruptcy court retained jurisdiction over the Estate’s assets, it

“lack[ed] discretion . . . to alter the scope of the assignment.” See id.

      Additionally, under the second P.R.T.C. prong, the Assignment Order

“seriously affected the rights of all creditors . . . to receive payment for their

claims.” See id. The claims were a significant Estate asset. If YCLT is not able to

recover on these claims, the Estate’s creditors may never receive meaningful

distributions. See id.

      Blixseth did not appeal the August 30, 2011 Assignment Order; he appealed

only the March 12, 2012 Confirmation Order. Because the August 30, 2011

Assignment Order was final under P.R.T.C. and no appeal of that order was

noticed, Blixseth’s assignments of error to that order are not reviewable here. See

In re P.R.T.C., 177 F.3d at 780.

      (2)    The district court properly concluded that Blixseth does not have

appellate standing with regard to the order he did appeal, the Confirmation Order,

because he was not a “person aggrieved” by that order. See Motor Vehicle

Casualty Co. v. Thorpe Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869,

884 (9th Cir. 2012). The March 12, 2012 Confirmation Order did not assign the

claims to YCLT; it only approved the Plan, which incorporated the final

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Assignment Order by reference. Blixseth repeatedly disclaimed being a creditor of

the Estate. He is thus at most a defendant in an adversary proceeding, and lacks

appellate standing to challenge the Plan in that capacity. See Fondiller v.

Robertson (In re Fondiller), 707 F.2d 441, 443 (9th Cir. 1983).

      Moreover, contrary to what Blixseth asserted at oral argument before this

Court, in the adversary proceeding, Blixseth could and did defend against YCLT’s

claims on the grounds that BLX had not validly assigned them to YCLT, and

obtained a ruling on the merits of that argument, albeit an adverse one.

      (3)    Finally, Blixseth lacks appellate standing with regard to the

exculpation clause in the Plan. Unlike in Blixseth v. Yellowstone Mountain Club,

LLC, et al., No. 13-35190, the clause in the BLX Plan is narrow both in its

temporal scope and the persons it covers. Blixseth has not shown that he is

“directly and adversely affected” by it in any way, as he has not pointed to any

action he has or might affirmatively bring that would be barred by the clause. See

Thorpe, 677 F.3d at 884. Any contractual claims for attorney’s fees Blixseth might

bring would plainly be outside the scope of the exculpation clause. The district

court therefore properly held Blixseth lacked appellate standing with regard to the

exculpation clause in the Plan.

      AFFIRMED.

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