Court Opinion

ID: 4016884
Source: CourtListenerOpinion
Date Created: 2016-07-18 20:01:09.173549+00
Date Added: 2024-06-11T14:07:08.419802
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                             JUL 18 2016
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

MARC S. KIRSCHNER, as Trustee of The             No. 14-56182
Yellowstone Club Liquidating Trust,
                                                 D.C. No. 2:11-cv-08283-GAF-SP
              Plaintiff-counter-defendant -
Appellee,
                                                 MEMORANDUM*
 v.

TIMOTHY L. BLIXSETH,

              Defendant-counter-claim-3rd-
party-plaintiff - Appellant.

                    Appeal from the United States District Court
                       for the Central District of California
                     Gary A. Feess, District Judge, Presiding

                      Argued and Submitted February 25, 2016
                               Pasadena, California

Before: KOZINSKI, 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.

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      Timothy Blixseth appeals the district court’s grant of summary judgment in

favor of the Yellowstone Club Liquidating Trust (“YCLT”), which sued Blixseth to

collect on a pair of promissory notes. We affirm the district court.

      1. The district court correctly concluded that Blixseth’s defenses are barred

by collateral estoppel. In In re Yellowstone Mountain Club, LLC, 436 B.R. 598,

662 (Bankr. D. Mont. 2010), the bankruptcy court determined that Blixseth

executed the liability release in his marital settlement with the actual intent to

defraud the Yellowstone Mountain Club’s creditors. It was reasonable for the

district court in this case to treat the release of Blixseth’s obligations on the BLX

Notes as an integral aspect of that same transaction — the settlement of the

Blixseths’ divorce proceedings. Blixseth’s actual fraudulent intent had thus already

been litigated in the bankruptcy court. See Resolution Tr. Corp. v. Keating, 186

F.3d 1110, 1116 (9th Cir. 1999) (applying a four-factor test to determine whether an

issue is identical for collateral estoppel purposes). The district court therefore

correctly concluded that there was no genuine issue of material fact with respect to

Blixseth’s intent in releasing his promissory notes to BLX.

      2. Even if the district court erred in construing the BLX note release as an

integral aspect of the same transaction the bankruptcy court found to be an actual

fraudulent transfer, the record establishes that, as a matter of law, the BLX note

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release was a constructive fraudulent transfer. See Cal. Civ. Code § 3439.04(a)(2);

In re Bledsoe, 569 F.3d 1106, 1109 (9th Cir. 2009) (“Constructive fraud proceeds

on the theory that, although the debtor may not have had a fraudulent intent, the

court nevertheless should void the transfer, usually because the debtor received

inadequate consideration.”). Blixseth’s own expert determined that Edra was

insolvent when the marital settlement releases were executed. The promissory

notes that Edra gave BLX were therefore not “reasonably equivalent” to the value

of the claims against Blixseth that BLX gave up. See Cal. Civ. Code §

3439.04(a)(2). And upon the transfer, BLX became insolvent. See id. §

3439.04(a)(2)(B). There is thus ample support for the conclusion that Blixseth’s

release of his promissory notes to BLX was a constructive fraudulent transfer.

      3. Blixseth’s remaining arguments are meritless.

      AFFIRMED.

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