Federal Judge Dismisses Appeal by Yellowstone Club Trust

BUTTE, Mont., Oct. 7, 2011 /PRNewswire/ -- A federal judge today dismissed an appeal that would have confirmed a $40 million judgment against developer Tim Blixseth, the founder of the exclusive Yellowstone Club in Montana. In a significant victory for Mr. Blixseth, US District Court Judge Sam E. Haddon dismissed the appeal by the Yellowstone Club Liquidating Trust because the judgment is not final and is still a "moving target."

In previous rulings, the Ninth Circuit Court of Appeals similarly refused to hear the appeal seeking to confirm the approximately $40 million judgment against Mr. Blixseth.

"I've done nothing wrong and the judgment against me should be thrown out," Mr. Blixseth said. "More importantly, a recent Supreme Court decision makes clear that a lone bankruptcy court judge in Montana has no constitutional ability to decide matters like these," Mr. Blixseth added.

Mr. Blixseth's legal team has consistently argued that his case clearly should never have been adjudicated by a US bankruptcy judge, without a jury and without the normal rules of civil discovery. Notably, the bankruptcy court in Montana initially forced Mr. Blixseth to go to trial only three weeks after he was sued for over $200 million. As the US Supreme Court made clear earlier this year in Stern v Marshall, bankruptcy courts have no constitutional authority to decide the very state law claims against Mr. Blixseth that the bankruptcy court did in Montana. Such matters should be handled instead by US District Courts, the Supreme Court ruled.

"Stern v Marshall signaled the end of many years of allowing isolated bankruptcy judges to wield unbridled and unchecked judicial power in bankruptcy courts by trying cases that should have been tried by an independent judge," Mr. Blixseth said. "All I've ever wanted is a fair shake and an opportunity to lay out my case before a jury of my peers and an independent judge. That's what real justice is all about and that is what the Constitution requires. The judgment against me should be dismissed and the process started the right way, with fairness for all parties."

On August 16, 2010, prior to the landmark Stern v Marshall ruling, US Bankruptcy Judge Ralph Kirscher ruled on his own in the Yellowstone Club bankruptcy case and issued the $40 million judgment against Blixseth. The club filed for bankruptcy protection in 2008, and was owned at the time by Mr. Blixseth's ex-wife and controlled by Sam Byrne of Cross Harbor Capital Partners of Boston.

"All I ever did was borrow money from an aggressive lender, Credit Suisse, which promised the Yellowstone Club loan would never have recourse to me. Credit Suisse and one of its bondholders, Sam Byrne, have been behind the scenes in all of this litigation and ended up as partial owners of the Yellowstone Club at a fraction of its real worth. They and their partners weren't satisfied with just getting the club for a steal, they then fabricated a case against me. It's just one more example of the era of greed on Wall Street, as exposed in the award-winning documentary, 'Inside Job.'"

SOURCE Tim Blixseth