Blixseth v. Yellowstone Mountain Club, LLC et al

Filing 51

MEMORANDUM AND ORDER. The February 25, 2011 Memorandum of Decision of the United States Bankruptcy Court is AFFIRMED. Signed by Judge Sam E Haddon on 11/16/2012. (ELL, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANAfI
BUTTE DIVISION

LED

NOV \6 2012
CIertt, u.s 0IIITid Court
0isIrict Of Montana
Butte

Inre:
YELLOWSTONE MOUNTAIN
CLUB, LLC,
Debtor.

No. CV-II-73-BU-SEH
TIMOTHY L. BLIXSETH,
Appellant,

MEMORANDUM AND ORDER

vs.
YELLOWSTONE MOUNTAIN
CLUB, LLC; CREDIT SUISSE; AD
HOC GROUP OF CLASS B UNIT
HOLDERS; CIP SUNRISE RIDGE
OWNER LLC; ROBERT SUMPTER;
NORMANDY HILL CAPITAL LP;
MARC S. KIRSCHNER; CIP
YELLOWSTONE LENDING LLC;
CROSSHARBOR CAPITAL
PARTNERS LLC,

On appeal from Bankruptcy
Case No. 08-61570-11

Appellees.

INTRODUCTION
Timothy L. Blixseth (Blixseth) moved to disqualify the Honorable Ralph B.

Kirscher, United States Bankruptcy Judge, in the Chapter 11 bankruptcy In re
Yellowstone Mountain Club, LLC, Cause No. 08-61570-11, and in five related
adversary proceedings. I All were opposed. Judge Kirscher denied the motions on
February 25, 2011. Blixseth moved for reconsideration. Judge Kirscher denied
the motions for reconsideration on July 26, 2011. This appeal followed. 2
ISSUE

The single substantive issue raised by the appeal is whether under
28 U.S.C. § 455 Judge Kirscher should have disqualified himself as requested. 3
DISCUSSION

The disqualification statute, 28 U.S.C. § 455, provides, in pertinent part:
"[a]ny justice, judge, or magistrate of the United States shall
disqualify himself in any proceeding in which his impartiality
might reasonably be questioned."
28 U.S.C. § 455(a).
Disqualification is to be granted or ordered only when the record,
appropriately assessed, so warrants. Clemens v. U.S. Dist. Court for the Dist. of

I

Adversary Proceeding Nos. 09-00014,09-00018,09-00064,10-00015 and 10-00088.

Similar appeals were filed in Cause Nos. CV-II-74-BU-SEH, CV-II-75-BU-SEH,
CV-II-76-BU-SEH, CV-77-BU-SEH and CV-II-78-BU-SEH.
2

The separately stated issue of whether Judge Kirscher erred in denying Blixseth's
motion for reconsideration is subsumed by resolution of the substantive appeal issue.
3

2

Cal., 428 F.3d 1175, 1179 (9 th Cir. 2005) (a judge has a strong duty to sit when
there is no legitimate reason to recuse). The test to be applied is "whether a
reasonable person with knowledge of all the facts would conclude that the judge's
impartiality might reasonably be questioned." Pesnell v. Arsenault, 543 F.3d
1038, 1043

W" Cir. 2008).

The reasonable person, in this context, means a "well­

informed, thoughtful observer," and not a "hypersensitive or unduly suspicious
person." Clemens, 428 F.3d at 1178. 4
Judge Kirscher's February 25,2011, Memorandum of Decision contains an
exhaustive and detailed analysis and discussion ofBlixseth's involvement with the
Yellowstone Mountain Club entities/ the history of the Yellowstone Club related
bankruptcies, Blixseth's participation in those proceedings, Blixseth's contentions
in seeking disqualification, and the law to be applied in addressing the motion for
disqualification. Factual matters within the Bankruptcy Court's personal
knowledge are articulated in detail.

B1ixseth argues this Court adopt a standard of review grounded in the proposition that
the judge's actions should be assessed from the "perspective of a reasonable person who is
predisposed to suspicions about the inner workings of the judiciary." See Blixseth's Opening
Brief at 5-6, This suggested standard is rejected as it finds no support in the law of this Circuit,
and is so lacking in specificity as to be incapable of meaningful application,
4

; The Yellowstone Club entities consist of: Yellowstone Mountain Club, LLC;
Yellowstone Development, LLC; Big Sky Ridge, LLC; and Yellowstone Club Construction
Company, LLC,
3

By contrast, the factual assertions advanced by Blixseth, both before Judge
Kirscher and in this appeal, are grounded in his self-serving affidavits which he
claims must be accepted as true. He is mistaken. The Court is not obliged to
adopt, and does not adopt, the assertions of fact in the affidavits as true. In re
Stasz, 2011 WL 6934442 *4 (9th Cir. BAP 2011); In re American Ready Mix, Inc"
14 F.3d 1497, 1501 (loth Cir. 1994). Moreover, many of the assertions of "fact"
recited by Blixseth simply cannot be reconciled with the record. To give weight to
such unsupported, or outright contradicted by the record, declarations would be
entirely unwarranted.
No detailed point by point discussion of Blixseth's characterization of
events occurring in the underlying bankruptcy proceeding, or of the many and
frequent flaws in those characterizations, is necessary. Having carefully
considered the record as a whole, including the rulings and findings made by
Judge Kirscher and the bases for those rulings and findings, I conclude that no
showing of bias, or prejudice or any lack of impartiality by Judge Kirscher has
been demonstrated. Rather, dispassionate assessment reveals that extraordinary
consideration was accorded Blixseth and his position throughout the proceedings.
CONCLUSION

I fmd no basis in the record upon which to conclude that Judge Kirscher
4

erred in refusing to disqualifY himself.

ORDER
The February 25,2011, Memorandum of Decision6 of the United States
Bankruptey Court is AFF~D.
DATED this

/0 day of November, 2012.

United States District Judge

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Case No. 08-61570-11

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