484 B.R. 360
9th Cir. BAP2012Background
- MDOR sued Blixseth in Nevada bankruptcy court for improper venue under 28 U.S.C. § 1408(1) as part of an involuntary petition filed with other tax authorities.
- Petition listed Blixseth’s residence as Medina, WA, and his place of business as Las Vegas, NV; venue box claimed Nevada as proper due to 180-day connection.
- MDOR and others asserted claims totaling about $2.3 million; Idaho and California agencies withdrew, leaving MDOR as sole petitioning creditor.
- The bankruptcy court sua sponte issued an OSC questioning Nevada venue because Blixseth’s connections to Nevada appeared limited and intangible assets were involved.
- MDOR argued that Blixseth’s principal assets were his interests in Desert Ranch LLLP and Desert Ranch Management LLC, both Nevada entities, making Nevada proper under § 1408(1)(4).
- Blixseth contended no Nevada residency, business, or property; he admitted the Nevada entities exist but argued their assets are non-Nevada real estate and thus not located in Nevada.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Blixseth’s principal assets located in Nevada for § 1408(1)? | MDOR: assets located in Nevada via Desert Ranch/Desert Management. | Blixseth: intangible interests lack situs; residence determines location; UCC context not Nevada. | Yes; Nevada proper venue for § 1408(1) based on Nevada location of assets. |
| What is the proper situs of intangible ownership interests for venue? | Location found via Nevada charging-order framework; Nevada governs asset location. | Intangibles have no fixed location; domicile governs situs; common-law approach supports Washington. | Situs determined by context; Nevada can be proper for this case. |
| Should venue be maintained in Nevada for justice and convenience? | Nevada is convenient given Nevada entities and asset structure; favors administration in forum state. | Not clear that Nevada is more convenient; risk of forum shopping by creditors. | Convince factors favor Nevada; venue proper there. |
| Does Nevada law’s charging-order mechanism affect venue analysis? | Charging-order framework indicates assets located in Nevada. | Charging orders relate to collection, not venue; misapplication of statutes. | Yes; Nevada's charging-order structure supports Nevada as situs for assets. |
| Does UCC Article 9 or common law govern intangible asset location for venue? | UCC/perfection location supports Nevada residence as situs. | Common law suffices; office of intangible property follows domicile; UCC applies to perfection, not venue. | Context-specific approach; in this case, Nevada location applicable. |
Key Cases Cited
- Office Depot, Inc. v. Zuccarini, 596 F.3d 696 (9th Cir. 2010) (context-specific analysis for intangible assets; multiple locations possible for different purposes)
- Koh v. Inno-Pac. Holdings, Ltd., 54 P.3d 1270 (Wash. App. 2002) (charging-order framework; location of partnership interest per state-law structure)
- In re Murrin, 461 B.R. 763 (Bankr. D. Minn. 2012) (contextual approach to venue location for assets; emphasis on administration convenience)
- In re Washington, Perito & Dubuc, 154 B.R. 853 (Bankr. S.D.N.Y. 1993) (accounts receivable location influenced by debtor's place of business; venue concerns avoiding distant forums)
- In re Iroquois Energy Mgmt., LLC, 284 B.R. 28 (Bankr. W.D.N.Y. 2002) (contextual common-sense approach to location of intangible assets)
- Delaware v. New York, 507 U.S. 490 (1993) (root principle for locating intangible property; domicile governs general situs)